Rein in these card sharks
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THEY WON'T break your legs for a late payment, but, beyond that, credit card companies can resemble the most abusive loan sharks. Usurious interest rates, dunning notices, surprise fees, arbitrary cuts in credit lines, and other dark practices have only gotten worse since the economy's collapse, hitting even cardholders with good credit who always pay their bills on time. Add to this the fact that
Sensing the mood is ripe, the US House is expected today to vote on a credit cardholder's bill of rights. Co-sponsored by Representatives Barney Frank of Newton and Carolyn Maloney of New York, the bill would end the most egregious practices that have enraged consumers. The list is long: applying payments only to the lowest-interest balances and letting high-interest charges mount; changing the rules on late fees; applying multiple fees for a single credit-limit violation; and something called "universal default," which triggers a spike in interest rates because of a late payment on an unrelated bill, such as an electric or gas bill.
The legislation also would require companies to mail bills 21 days before they are due, and prohibit issuing credit cards to minors. And at least 50 amendments are expected, including one from Representative John Tierney of Salem to cap interest rates at 18 percent.
The Federal Reserve adopted some of the bill's provisions as regulations in December. But those are not scheduled to take effect until July 2010, and they need the force of law.
The banks call the legislation anticompetitive, but consumers are the ones with few choices. A survey last month by the Pew Charitable Trusts found that 93 percent of the nation's 663 million cardholder agreements allow the company to raise any interest rate at any time for any reason.
President Obama called executives of 13 credit card companies to the White House last week, warning them to prepare for tougher regulations. "No more fine print, no more confusing terms and conditions," he said. The administration also wants to see a "plain vanilla" card offered, with simple rates and conditions.
Credit card companies are themselves in straitened financial circumstances, and they have perfected how to squeeze every penny from their customers. Of course, people need to take responsibility for their own spending. But changing a due date on a bill without warning, for just one example, offends the American sense of fair play. The credit cardholder's bill of rights is one bill that really is overdue.
