Credit Card Industry Gets Senate Warning
Members of the Senate Banking Committee were threatening representatives of the credit card industry with new rules on card disclosures after consumer advocates testified during a hearing last week that card issuers are piling up big profits with new and higher fees and rates.
The consumer groups told the panel that card users often feel deceived because the details of what triggers the new and higher fees and rates are often buried or concealed in fine print.
The hearings were held just as three major credit card companies, Bank of America, MBNA and Citibank, announced they are lifting minimum payments from 2% to 4%, effectively doubling what many consumers will pay each month on their credit card balances.
The hearing was the first one held by Congress since last month's passage of the credit card company-backed bankruptcy reform bill, which will help the card companies collect more debt from bankruptcy filers.
Several members of the company called on the card companies to voluntarily provide easy-to-understand and broader disclosures. Otherwise, they warned, Congress may require them to do so. Among the suggestions are disclosures on how long it would take to pay off a balance by paying the minimum, and providing a toll-free phone number to get more detailed estimates.
Committee members questioned such common practices as teaser rates, late fees and default clauses that let issuers raise rates retroactively.