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Senate banking committee Chairman Chris Dodd proposed a legislation today that would freeze the interest rates on the existing balances of an estimated 700 million credit cards.

While Dodd’s camp maintains that the legislation reinforces the Congressman’s opinion that “more consumer protections were needed,” many critics see the proposal as another “political maneuver” by the lawmaker who is seeking reelection:

Mr. Dodd’s proposal seemed aimed at reconnecting the Connecticut Democrat with voters, many of whom have questioned his close ties to big banks after he was tied to a sweetheart loan scandal. The Senate ethics committee cleared him of violating any rules, although his poll numbers remain shaky.

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We called it! While some industry experts like Curtis Arnold of CardRatings.com said that they didn’t expect the recently-enacted credit card reform to impact good customers, we warned readers back in May that it was inevitable.

It’s simple: if you take away the credit card companies’ ability to raise rates, then they’ll simply develop new and “creative” fees and charges to nickel and dime their customers. Perhaps “nickel and dime” isn’t entirely fair since fees and charges are two of the main sources of income for credit card companies (emphasis added):

Dissatisfaction over rates and fees has led to the lowest level of overall credit card customer satisfaction in three years. So says the J.D. Power and Associates (JDP) 2009 Credit Card Satisfaction Study, which gave the nation’s major credit card companies a score of 703 out of 1,000 possible points — the lowest tally since the study began in 2007.

The study graded the card companies based on the following six factors:

Are you happy about the new credit card reform? Chances are, if you’re a responsible, even quasi-responsible cardholder, the answer may be “no”. While some of new rules have already taken affect, the bulk of the changes don’t begin until February.

Here’s just a few of the upcoming changes:

Has your bank been charging you extra fees on your various accounts? Saddled with losses from rampant foreclosures and credit card delinquencies, banks and credit unions say they have been forced to raise fees and charges in order to maintain a competitive edge in today’s unique economic environment:

“There is an economic storm that has made revenue fall,” said Michael Moebs, an economist and chief executive of Moebs Services, an economic research firm in Lake Bluff, Ill. “Fee income is basically where banks and credit unions can offset both loan- and investment-related losses.”

The House’s approval of the credit card bill today sends the legislation straight to President Obama’s desk for his signature, which could come as soon as Memorial Day.

Yesterday we reported how this credit-card reform could have an adverse affect on responsible credit card holders. Financial expert Ellie Kay has offered some ways to combat the changes the card reform could bring.

Since both lawmakers and the Federal Reserve have drafted new rules to curb “unfair” practices that some feel exploit struggling credit card holders, banks are beginning to shift their focus to responsible borrowers in order to make up for the billions they are expected to lose once the new rules take effect:

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

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