Congress Threatens Broader Credit CardDisclosures
WASHINGTON - (05/19/05) -- Members of the Senate BankingCommittee warned representatives of the credit card industry thisweek they may impose new rules on card disclosures after consumeradvocates testified that card issuers are piling up big profitswith new and higher fees and rates. The consumer groups told thepanel that card users often feel deceived because the details ofwhat triggers the new and higher fees and rates are often buried orconcealed in fine print. Several senators questioned such commonpractices as teaser rates, late fees and default clauses that letissuers raise rates retroactively. "The industry needs to wake up,"said Sen. Christopher Dodd, D-Ct., saying the legislation may nothappen in this Congress but is more likely in the future. Thehearing was held just as three major credit card companies, Bank ofAmerica, MBNA and Citibank, announced they are lifting minimumpayments from 2% to 4%, effectively doubling what many consumerswill pay each month on their credit card balances. The hearing wasthe first one held by Congress since last month's passage of thecredit card company-backed bankruptcy reform bill, which will helpthe card companies collect more debt from bankruptcy filers.Several members of the company called on the card companies tovoluntarily provide easy-to-understand and broader disclosures.Otherwise, they warned, Congress may require them to doso.