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.”
