After millions of borrowers learned how credit cards work the hard way, change has come. Back in May, a new bill was signed into law intending to protect consumers from the dark, ugly, world of borrowing money at high interest rates.   

One of the big new changes limits when interest rates can be hiked, and who those hikes can be levied on. But that rule doesn't go into effect until next February. Some worry that between now and then, banks will rush to jack up credit card interest rates while they still can. One last hurrah before the Feds come marching in.

Earlier this week, Bank of America (NYSE: BAC) went out of its way to let politicians know it's all good in the 'hood. In a letter to Congressman Barney Frank, Bank of America wrote: "In light of the concerns expressed to us by our customers, Bank of America will not implement any change in terms (risk or economic based) re-pricing of consumer credit card accounts between now and the effective date of the CARD Act."

Meanwhile, Wells Fargo (NYSE: WFC) isn't rolling over that easy. It's raising the interest rate on most of its cards by three percentage points, February rules be damned.

Not surprisingly, that got people fired up. As Congresswoman Betsy Markey recently said, "The implementation of these necessary reforms should not be taken as an indication that the industry should take advantage of consumers now before the prohibitions come into effect."

Easy there
I agree that the credit card industry needs serious reform. But asking for what's effectively a moratorium on pricing risk might be one of the worst ideas I've ever heard.  

Consider this: Bank of America just announced that its credit card default rate hit14.54% in August. Weeks later, the U.S. Treasury released its quarterly mortgage report. The report shows that the "seriously delinquent" rate on subprime mortgages is now 17.8%.

Think about that: Subprime mortgages -- a product not available anymore because everyone knows they're a disaster -- are failing at a rate not much higher than Bank of America's credit card portfolio.

Point being, banks needto raise credit card interest rates to offset surging losses.

The only reason banks haven't shut down the credit card market completely (like they did with subprime) is because consumers can tolerate the exorbitant interest rates banks then use to counteract losses. Continued...