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March 6, 2007
Congressional Hearing on Credit Card Fees & Practices
The U.S. Senate Permanent Subcommittee on Investigations, chaired by Carl Levin (D-MI), has scheduled a hearing for Wednesday, March 7, 2007, on "Credit Card Practices: Fees, Interest Rates, and Grace Periods".
Two panels are scheduled: Panel I includes one consumer and Alys Cohen, Staff Attorney for the National Consumer Law Center. Panel 2 includes representatives from the credit card operations of Bank of America, Chase Bank and Citigroup.
This is billed as only the first of several hearings that will focus on credit card practices. In this hearing, expect testimony and questions about how credit card issuers apply interest rates and fees to consumer accounts. The subcommittee wants to know how credit card issuers select interest rates and eliminate grace periods. The subcommittee is also concerned about high fees charged for late payments and over-the-limit charges, as well as how those fees add to interest costs and increase consumer debt. The committee will examine an industry practice requiring consumer payments to be applied first to balances with the lowest interest rates instead of to balances with the highest interest rates. Part of the basis for the hearing is a September 2006 GAO report detailing the finance charges, fees, and disclosure practices associated with 28 popular credit cards.
Previous Inquiry into Credit Card Practices is detailed on the Sen. Levin's website, including: The 2006 GAO Report indicating that "credit card issuers are making more of their money from climbing fees, complex interest charges, and poor disclosure practices that take advantage of working families. In 2006, Americans used nearly 700 million credit cards to purchase more than $1.8 trillion in goods and services, including essentials like groceries and gas. Bombarded by more than 3 billion credit card solicitations in the mail, by 2004, the average American household owed credit card debt of more than $5,100."
LInk: http://levin.senate.gov/senate/investigations/index.html
(ag) Mar. 6, 2007, in Congress/Predatory Lending
March 6, 2007 in Congress, Predatory Lending/Subprime Lending | Permalink
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Comments
Citi-Bank after a couple of years of working with them to restore my credit with them did so. This took place in July 2006. Sometime in Feb. 2007 my credit line was decreased according to some derogatory info on a credit report Citi pulled. Citi not only reduced my credit line from info totally unrelated to them, they charged me a $50.00 annual fee for the next year without a full year expiring from the time my credit with them was reinstated. This is offensive on multiple levels. Firstly, they reduced my credit line due to perhaps incorrect info completely unrelated to their account which now negatively impacts my credit score. In addition,and secondly, the reduction of the credit line permits them to charge an over the credit line fee. Virtually, I cannot use the credit card until I pay down the account they have now charged a $50.00 per year fee to have??? Please note, the negatively reported info involved a revolving credit line. I no longer keep any other credit cards because of these banking gouging usurous practices. I hope you will address these issues at your hearings. In addition, the ATM fees, charged by all banks for "out of the network" usage is prohibitive and offensive as well. There should be a cap on all fees. Adding insult to injury re: credit line reductions with info unrelated to the individual account such as citi-bank should be prohibited. In an attempt to re-establish credit they have reversed and re-ruined the credit score by lowering the credit line with no basis other relating to them!!! Please address this issue at your next hearing. Please feel free to contact me at the above email as well.
Thank you,
Iris Butler
Posted by: Iris Butler | Mar 13, 2007 9:56:43 PM
Dear Sir, I have been fighting Montgomery Ward, Bank one, and MBNA for four years, disputing my charges. When I addressed these issues and disputed the bill, they send my debt to a third party collection agency, destroying my credit and now I owe three times the amount I disputed and have been taken to my local Magistrate. I showed up to the hearing, they did not and I won the case; however now they have appealed the decision and my case is now in appellate court. This goes on and on. I went through some very hard times and just wanted them to deduct my charges to it's original debt, less all the late fees etc. The truth is I paid off this card many times over, I was just charged enormous late charges and my total went up and up. I would have been better off going to my local loan shark, his prices are much more reasonable and I would have healed by now when he broke my legs.I have not used a major credit card since 1999 and will never use anything but my visa, which is taken directly from my bank acount. We need help. I have absolutely no credit and I have worked and paid my bills all my life. Please sir, stop these banks from keeping us at their mercy. Except for winning the lottery, I can't see getting out of this cycle.......
Thank you
Carol P. Demi
Posted by: Carol P. Demi | Mar 14, 2007 11:27:27 AM
I've been following this issue very closely, do you have a facebook? I've organized an online group to organize concerned Americans with links to recent news reports and ways to contact their representatives, I encourage you to join:
http://unomaha.facebook.com/group.php?gid=2257128717
Posted by: Adam Kochanowicz | Mar 22, 2007 9:15:35 PM
Predatory lending is the #1 issue right after the
War on Iraq. I find it shameless the way banks
and financial institutions can charge interest rates
as high as 34% based on whim. At a time when interest
rates were at an all time low, these vultures moved
into the market. The old finance companies now call
themselves banks. Credit card lending doesn't have
to honor a contract - it changes as it goes.
So much money was dumped into this administration
by lobbyists from financial institutions and insurance
companies, that if it is not rectified, I worry about
the financial health of the US economy.
Granted, there needs to be some payoff for the risk
in loaning money - but within limits. These companies
are insuring that loans will never be paid off. They
are also writing in fees that are totally outrageous.
One "bank" subcontracts their loan to a company that
charges $5.95 if you pay the bill by phone or on-line.
Personally, I think this bank should eat the $5.95 because their interest rates are not the best.
Remember, it is not the middle class playing heavily
in the global economy. It is the middle class paying
heavily in the local economy. Wealthy people put their
money in the market. The average person has to use a
credit card because of the rising costs of energy, healthcare, food & any other cost.
Posted by: Janet Hill | Apr 2, 2007 2:53:21 PM
This is a good one! $500 limit on a credit card. After I noticed rediculous fees, I closed it and sent a final payment of$140.79 to payoff completely. My next statement showed a $1.07 balance. I called them again for the 3rd time and told them to close the account. My next statement came in at $41.07. Charged a $40 late fee. They have been adding a $40 late fee since then! These practices are a JOKE! This account has ruined my credit. WE NEED HELP!
Posted by: eddie | Aug 21, 2007 9:54:32 AM
I am also a victim of these credit card scams. Yes, I was aware of the interest rate, but they don't tell you about the fact that they will charge you to pay the bill on the phone or on the internet. (Then if you mail the bill you run the risk of being late & charged more ridicuous fees!)Then if you are a day late they charge you a late fee which puts you over the so-called "limit" and then have nerve to charge you an "over the limit" fee as well. HIGHWAY ROBBERY!!!! The sad part is, that it's perfectly legal. When I pay my cards off, I vow to never again use another credit card except my debit card. I could have saved my money & earned interest instead, learned my lesson. However, that does NOT excuse the unsavory practices of the credit card industry as a whole.
Posted by: Lisa B. | Feb 12, 2008 2:12:55 PM
