Barack Obama has spoken out against what he sees as the predatory
lending practices of credit card companies, accusing them of
employing “unfair and deceptive practices to trick Americans into
signing agreements they can’t afford”.
that will see him reach out to electoral hotspots to discuss
economic issues with the hope of securing supporters, Obama
recently held a roundtable talk in Chicago with a group of
consumers that claimed to have been financially mauled by the
credit card industry.
is reinstating government regulation of credit card interest rates.
The government has not been involved in interest rate regulation
for 30 years, after a US Supreme Court ruling effectively blocked
states from engaging in the practice. Obama was joined at the
roundtable by Elizabeth Warren, a Harvard law professor and one of
the country’s foremost advocates for the re-regulation of credit
card interest rates.
conditions in the US are forcing American consumers to spend more
and more on their credit cards. While he is quick to castigate
those who make irresponsible decisions regarding their finances,
the Illinois senator believes that many people are being duped by
credit card companies into convoluted agreements that they can
neither understand nor afford.
have gone from being one page long a few decades ago to more than
30 pages long today. And they are often filled with traps and fine
print that only a credit card executive could understand. These
companies have been crossing the line to boost their bottom line,”
Washington has thus far failed to clamp down on this type of
predatory lending, citing the fact that lobbyists for the credit
card industry have been actively getting “laws written to their
to be rigged against ordinary Americans,” continued Obama. “We need
a president who will look out for the interests of hard-working
families, not just their big campaign donors and corporate
rival Republican presidential nominee John McCain, who has also
come under fire from Obama for refusing to tackle the credit card
industry and what Obama perceives to be “unfair” lending
would have required credit card companies to inform borrowers on
their monthly statements that making only a minimum payment would
increase the amount of interest paid and the time it would take to
pay off the full balance.
part of the solution. When he had the chance to help families avoid
falling into debt, John McCain sided with the credit card
companies,” said Obama.
industry’s bankruptcy bill that made it harder for working families
to climb out of debt, he supported it – and he even opposed
exempting families who were only in bankruptcy because of medical
expenses they couldn’t pay.”
‘Bill of Rights’
As early as November 2007, there were already clear signs that the
issue of credit card lending was to become a cornerstone in the
Bill Of Rights’, making it clear he wants to ban the practice of
‘universal defaults’, where a credit card company raises the
interest rate on someone who has made every payment on time but who
has a problem or late payment with a different creditor.
as well as interest rate hikes on previously accumulated
interest rates, then that new, higher rate should apply to the debt
you add going forward, not what you already owe,” he said. “The
store can’t change the price of what you bought after you bought it
and neither should your credit card.”
rating system for credit cards that would see the Federal Trade
Commission calculate the degree to which credit cards meet
consumer-friendly standards. A card’s rating would ultimately
depend on measures such as the spread between the card’s
introductory rate and the maximum rate allowed.
companies and avoid those that are stacking the deck against them,”