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March 28, 2007

US Democrats introduce credit card legislation

Democrat politicians in the US House of Representatives have introduced legislation requiring credit card companies to give consumers more information about the consequences of making only the minimum monthly repayment on their card balances Issuers would have to outline the time needed to pay off a balance if only the minimum payment is made, and would also have to warn consumers about the interest costs The bill also requires issuers to provide a free telephone number to offer credit counselling.The Credit Card Repayment Act of 2007 was introduced by Representative David Price, who said: Consumers deserve to have better information from credit card companies to get themselves out of debt

By Verdict Staff

Democrat politicians in the US House of Representatives have introduced legislation requiring credit card companies to give consumers more information about the consequences of making only the minimum monthly repayment on their card balances. Issuers would have to outline the time needed to pay off a balance if only the minimum payment is made, and would also have to warn consumers about the interest costs. The bill also requires issuers to provide a free telephone number to offer credit counselling.

The Credit Card Repayment Act of 2007 was introduced by Representative David Price, who said: “Consumers deserve to have better information from credit card companies to get themselves out of debt. This bill provides a simple solution to the very serious problem of rampant consumer debt. I hope this more consumer-friendly Congress will act soon to rein in this deceptive and potentially ruinous lending practice.”

‘Predatory practices’

Earlier this year, a hearing at the Senate Permanent Subcommittee on Investigations examined credit card practices. The subcommittee chairman, Senator Carl Levin, said that legislation may be needed to stop what he termed “predatory practices” by card issuers, namely the charging of interest and fees on balances that have already been repaid. At the hearing, executives from JPMorgan Chase’s Chase Bank USA, Bank of America Credit Card Services and Citigroup’s Citi Cards said they are trying to improve their communications with customers over fees and charges.

Vikram Atal, chairman and CEO of Citi Cards, told the hearing that Citi is eliminating repricing for universal defaults for all customers during the term of their card. “It is standard practice for credit card issuers to consider a customer’s credit behaviour with respect to other financial commitments to other companies, and to increase their interest rates if warranted by such behaviour. That is not an illogical practice… still, we recognise why customers, and others, would question the practice.”

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