Wednesday, March 07, 2007

Senators to shine light on credit card practices

I have been complaining about this behavior for years…

From Reuters:

Legislation may be needed to stop overzealous credit card companies from piling on interest rates and fees that have plunged millions of American families deeply into debt, a senior Democratic senator said on Tuesday.

On the eve of a hearing on the industry’s practices, Carl Levin of Michigan, who chairs the Senate permanent subcommittee on investigations, said too many consumers are suffering from what he called predatory practices and murky fees.

“Millions of families… are kept in debt and are in over their heads not just because of their own purchases… but because of the abusive practices and the excesses of the credit card companies,” Levin told reporters.

Testifying before Levin’s panel on Wednesday will be executives from Bank of America Card Services, JPMorgan Chase’s Chase Bank and Citigroup’s Citi Card.

The three companies did not immediately respond to messages asking to comment on the hearing.

Last week, Citigroup, the third-largest U.S. credit card issuer, said it will no longer automatically raise interest rates for cardholders who fail to make payments on other bills. Known as “universal default,” the practice has long been criticized by consumer advocates who argue that it victimizes poorer borrowers.

Norm Coleman of Minnesota, the top Republican on the subcommittee, said Citigroup’s recent move was encouraging.

We have got to bring back the usery laws I grew up with, the banking industry just plain needs to be controlled. I know I am a capitalist, but we give banks federal insurance to customers and we already regulate banking, so we need to control how much they can charge over the prime interest rate. We also need to do away with these fees and automatic jump in interest rates when you are in financial straights. Banks should be working with people in financial trouble, not raping them.