[X]
Write ReviewJump to 
4
Helpful
Votes
Votes
All Credit Card Companies Complaint - Abusive Credit Card Tactics and Pending Senate Reform Bills. Bank of America, Chase, Citibank, Discover Card, MBNA, Wells Fargo - Mastercard, Visa, Discover Card, American Express
Mastercard, Visa, Discover Card, American Express - Complaint
NATIONWIDE -- Last year MBNA, one of the leading credit card companies in the country, made more money than McDonalds, Wal-Mart, or Microsoft, according to the Frontline/New York Times story “The Secret History of the Credit Card.” [link to http://www.pbs.org/wgbh/pages/frontline/shows/credit/]. To most consumers, this should come as no surprise; all they have to do is look at the fees and interest charged on their credit card bills. Instead of earning a fair return on their investment, credit card companies are engaging in highly unethical practices for one express purpose: to rob the American people of as much money as they can. These abusive practices have gotten so out of control that contract attorney Elizabeth Warren of the Harvard Law School refers to the industry as “the new loan sharks in America.”
Consider some of the following abusive practices of the credit card industry
• Increasingly higher late payment and over the credit limit fees, now as high as $39. Here’s a real world example of how these fees are used unfairly. A card holder was assessed a finance charge which put her over her credit limit for the month, resulting in a $29 over-the-credit-limit fee. Since she didn’t know about it until she received her next statement, she also was charged $29 over-the-limit fee for the next month, or a total of $58!
• Not promptly crediting payments from customers, resulting in late fees, even when the payment was sent 10-14 days prior to the due date.
• Requiring payments to be credited by 10AM to noon on the due date, before the mail can be received that day.
• Increasingly higher interest rates during the time when U.S. Prime interest rates were at a 40 year low.
• “Bait and switch” promotions, giving consumers very low introductory APR rates, which are greatly increased to 30% or more if the customer makes a payment even 1 minute late.
• Raising the interest rate with no advance notice to the customer.
• Raising the interest rate to 30% or more if the customer is in default of any other bill, even if their payment with the particular credit card company is perfect (“universal default” clause).
• Imposing punitive interest rates on prior balances. This is the only industry in America where a company can change the cost of an item after the fact.
• Require very low minimum payments of 2% of the outstanding balance, with the result that the debt keeps increasing even if the card is no longer used. The result is very high debt burden that the customer can never eliminate.
• Many credit card companies contain a clause in the contract which enables them to change the interest rate at any time for any reason.
• Deceptive marketing practices, including a low introductory interest rate in large print, and the time of expiration of the low rate and the final interest rate buried in the fine print.
• Aggressive marketing to individuals with no credit, such as college students, or those with very poor credit.
• Aggressive marketing to children under 18, either through mail solicitation or through web sites such as neopets.com and their affiliated marketing companies. A staffer of Senator Christopher Dodd had a 7 year old son who received a credit card solicitation in the mail, which referred to his “excellent credit.”
The result of the above practices on the American consumer is enormous:
• 145 million Americans have at least 1 credit card
• The average credit card holder has 4.8 cards
• The total debt on these cards is $800 billion dollars
• Industry revenue from credit card fees alone was $24.4 billion dollars in 2004.
• The average credit card debt per family is $7300
• There were twice as many bankruptcies since 1990
• 40% of the credit card holders pay only the minimum payment or slightly more
• The average college student has $3100 of credit card debt; 80% of all college students have a credit card
• 11% of all teenagers have credit cards
• 6% of 13-14 year old children have one
You might well be wondering how the credit card companies have gotten away with these predatory practices for so long.
Simply put, it’s a combination of de-regulation of the credit card industry that occurred in the 1980s and a lack of sufficient oversight by the U.S. Congress and the federal regulatory agencies. The federal agencies with the power to regulate the credit card industry are the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board. Neither of these agencies has done nearly enough to protect consumers. Many of the states would like to regulate the credit card business, but have been hampered in this effort by several Supreme Court decisions.
There are currently 3 bills that have been sent to the Senate Banking, Finance, and Urban Affairs Committee. The only hope for credit card reform in the near term is the passage of these bills.
The most comprehensive reform bill is S.499, The Credit CARD Act, proposed by Senator Christopher Dodd. This bill would eliminate most of the abusive practices of the credit card industry, including the following:
• It would eliminate the over-the-credit limit fee charges if the card company approved the charge.
• It would require a 15 day prior notice for an interest rate increase.
• It would require a date by which the payment must be postmarked in order to avoid late payment fees. A statement would be required that no late fee may assessed if the payment is postmarked on or before the required postmark day.
• It would require disclosure of the number of months required to pay off the balance if only the minimum monthly payment were made and there no more additional charges.
S.393, the Credit Card Minimum Payment Warning Act, has been introduced into the Senate by Senator Akaka and others. It contains the following provisions:
• It would require a statement saying that paying the minimum monthly payment will increase the amount of interest paid and extend the time of repayment.
• It would also require the disclosure of the time required to pay off the balance if only the minimum monthly payments were made and no additional charges incurred.
• It would require that the statement also contain the total amount of principal and interest if only the minimum monthly balance were paid.
• Consumers would also have to be provided with the amount of the monthly payment required to pay off the debt in 36 months.
S.1040, or the Credit Card Minimum Payment Notification Act, is a bill that has been introduced by Diane Feinstein. This bill does not include the stringent requirements and safeguards of the two aforementioned bills.
-Information on Senator Akaka’s bill
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.00393:
-Information on Senator Feinstein’s bill
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.01040:
-Information on Senator Dodd’s bill
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.00499:
Senator Shelby contact information: fax: (202) 224-3416
phone: (202) 224-5744
email: senator@shelby.senate.gov
Senator Sarbanes contact information: fax: (202) 224-1651
phone: (202) 224-4524
email form: http://sarbanes.senate.gov/pages/email.html
Email the Committee on Banking, Housing, and Urban Affairs directly: http://banking.senate.gov/index.cfm?FuseAction=Contact.Form
Contact information for other members of the committee can be found here. [link to:
http://banking.senate.gov/index.cfm?FuseAction=Information.Membership ]
San Francisco Chronicle article on Senator Feinstein’s bill
http://feinstein.senate.gov/news-plastic0522.html
=================================================================
MODEL LETTER TO SENATE
(cut and paste to your own letterhead)
Dear Senator Shelby,
I am writing to urge you to support the 2 bills referred to the Banking, Housing, and Urban Affairs Committee which support meaningful reform of the credit card industry, S.499 (Dodd) and S.393 (Akaka). The interest and fees on credit cards continue to grow annually, while the prime rate has been at a 40 year low. Interest rates of 30% are common, and the average late payment fee and over-the-limit fee are $29. These fees are designed to plunder as much as they can from the consumer. The credit card companies have used unethical “bait-and-switch” methods to lure new customers, and then later change their rates either for no reason, for paying their bill even minutes late, or for defaulting on another account (“universal default).” The low minimum monthly payment of 2% guarantees that many consumers will never be able to pay off their balance. Credit card companies should be required to disclose the length of time required to pay off the balance. These policies by the industry have resulted in an average credit card debt per family of $7300 and twice as many bankruptcies since 1990.
It is time for the Congress to stand up for the consumer. Please give your support to get these bills to the Senate floor.
Sincerely,
Your name
Your address
Consider some of the following abusive practices of the credit card industry
• Increasingly higher late payment and over the credit limit fees, now as high as $39. Here’s a real world example of how these fees are used unfairly. A card holder was assessed a finance charge which put her over her credit limit for the month, resulting in a $29 over-the-credit-limit fee. Since she didn’t know about it until she received her next statement, she also was charged $29 over-the-limit fee for the next month, or a total of $58!
• Not promptly crediting payments from customers, resulting in late fees, even when the payment was sent 10-14 days prior to the due date.
• Requiring payments to be credited by 10AM to noon on the due date, before the mail can be received that day.
• Increasingly higher interest rates during the time when U.S. Prime interest rates were at a 40 year low.
• “Bait and switch” promotions, giving consumers very low introductory APR rates, which are greatly increased to 30% or more if the customer makes a payment even 1 minute late.
• Raising the interest rate with no advance notice to the customer.
• Raising the interest rate to 30% or more if the customer is in default of any other bill, even if their payment with the particular credit card company is perfect (“universal default” clause).
• Imposing punitive interest rates on prior balances. This is the only industry in America where a company can change the cost of an item after the fact.
• Require very low minimum payments of 2% of the outstanding balance, with the result that the debt keeps increasing even if the card is no longer used. The result is very high debt burden that the customer can never eliminate.
• Many credit card companies contain a clause in the contract which enables them to change the interest rate at any time for any reason.
• Deceptive marketing practices, including a low introductory interest rate in large print, and the time of expiration of the low rate and the final interest rate buried in the fine print.
• Aggressive marketing to individuals with no credit, such as college students, or those with very poor credit.
• Aggressive marketing to children under 18, either through mail solicitation or through web sites such as neopets.com and their affiliated marketing companies. A staffer of Senator Christopher Dodd had a 7 year old son who received a credit card solicitation in the mail, which referred to his “excellent credit.”
The result of the above practices on the American consumer is enormous:
• 145 million Americans have at least 1 credit card
• The average credit card holder has 4.8 cards
• The total debt on these cards is $800 billion dollars
• Industry revenue from credit card fees alone was $24.4 billion dollars in 2004.
• The average credit card debt per family is $7300
• There were twice as many bankruptcies since 1990
• 40% of the credit card holders pay only the minimum payment or slightly more
• The average college student has $3100 of credit card debt; 80% of all college students have a credit card
• 11% of all teenagers have credit cards
• 6% of 13-14 year old children have one
You might well be wondering how the credit card companies have gotten away with these predatory practices for so long.
Simply put, it’s a combination of de-regulation of the credit card industry that occurred in the 1980s and a lack of sufficient oversight by the U.S. Congress and the federal regulatory agencies. The federal agencies with the power to regulate the credit card industry are the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board. Neither of these agencies has done nearly enough to protect consumers. Many of the states would like to regulate the credit card business, but have been hampered in this effort by several Supreme Court decisions.
There are currently 3 bills that have been sent to the Senate Banking, Finance, and Urban Affairs Committee. The only hope for credit card reform in the near term is the passage of these bills.
The most comprehensive reform bill is S.499, The Credit CARD Act, proposed by Senator Christopher Dodd. This bill would eliminate most of the abusive practices of the credit card industry, including the following:
• It would eliminate the over-the-credit limit fee charges if the card company approved the charge.
• It would require a 15 day prior notice for an interest rate increase.
• It would require a date by which the payment must be postmarked in order to avoid late payment fees. A statement would be required that no late fee may assessed if the payment is postmarked on or before the required postmark day.
• It would require disclosure of the number of months required to pay off the balance if only the minimum monthly payment were made and there no more additional charges.
S.393, the Credit Card Minimum Payment Warning Act, has been introduced into the Senate by Senator Akaka and others. It contains the following provisions:
• It would require a statement saying that paying the minimum monthly payment will increase the amount of interest paid and extend the time of repayment.
• It would also require the disclosure of the time required to pay off the balance if only the minimum monthly payments were made and no additional charges incurred.
• It would require that the statement also contain the total amount of principal and interest if only the minimum monthly balance were paid.
• Consumers would also have to be provided with the amount of the monthly payment required to pay off the debt in 36 months.
S.1040, or the Credit Card Minimum Payment Notification Act, is a bill that has been introduced by Diane Feinstein. This bill does not include the stringent requirements and safeguards of the two aforementioned bills.
-Information on Senator Akaka’s bill
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.00393:
-Information on Senator Feinstein’s bill
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.01040:
-Information on Senator Dodd’s bill
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:s.00499:
Senator Shelby contact information: fax: (202) 224-3416
phone: (202) 224-5744
email: senator@shelby.senate.gov
Senator Sarbanes contact information: fax: (202) 224-1651
phone: (202) 224-4524
email form: http://sarbanes.senate.gov/pages/email.html
Email the Committee on Banking, Housing, and Urban Affairs directly: http://banking.senate.gov/index.cfm?FuseAction=Contact.Form
Contact information for other members of the committee can be found here. [link to:
http://banking.senate.gov/index.cfm?FuseAction=Information.Membership ]
San Francisco Chronicle article on Senator Feinstein’s bill
http://feinstein.senate.gov/news-plastic0522.html
=================================================================
MODEL LETTER TO SENATE
(cut and paste to your own letterhead)
Dear Senator Shelby,
I am writing to urge you to support the 2 bills referred to the Banking, Housing, and Urban Affairs Committee which support meaningful reform of the credit card industry, S.499 (Dodd) and S.393 (Akaka). The interest and fees on credit cards continue to grow annually, while the prime rate has been at a 40 year low. Interest rates of 30% are common, and the average late payment fee and over-the-limit fee are $29. These fees are designed to plunder as much as they can from the consumer. The credit card companies have used unethical “bait-and-switch” methods to lure new customers, and then later change their rates either for no reason, for paying their bill even minutes late, or for defaulting on another account (“universal default).” The low minimum monthly payment of 2% guarantees that many consumers will never be able to pay off their balance. Credit card companies should be required to disclose the length of time required to pay off the balance. These policies by the industry have resulted in an average credit card debt per family of $7300 and twice as many bankruptcies since 1990.
It is time for the Congress to stand up for the consumer. Please give your support to get these bills to the Senate floor.
Sincerely,
Your name
Your address
Comments:
Posted by Hugh_Jorgen on 2006-04-18:
I guess it's the Libertarian in me, but the credit card companies can only do to you what you allow them to do. If you don't understand that borrowing money and only paying back 2% per month means you will be paying on the balance for a long, long time then perhaps you should not have access to credit. Yet if the credit card compaines restrict access to credit they are accused of "red lining" and other unsavory practices. Yes, the CC companies have figured out the stupid things people do with credit cards (run them up to and over the limit, pay late, make minimum payments) and they have imposed a "stupid tax" on those people. While I can see the original poster's point, I don't know that yet more government regulation to protect people from themselves is the answer. Sorry for the long winded rant.
Posted by viperpa33s on 2006-04-18:
Most of what the poster posted is giving an excuse to the card holder. The person who racks up the debt needs to take resposibility for his/her actions. When a person is late (even 1 minute) with there payment and they were givin 2 weeks or more to pay it, that is no excuse. When people get that application in the mail, they don't look at it. They get all excited and mail the application in without reading the fine print. When people max out there credit cards who takes responsibility for that? People abuse there credit cards, and then say it is not there fault. I have had credit cards since I was 18 years old. When I was young I abused my credit cards and I paid for that mistake. Now I learned and know how to be responsible with debt. Some people just want to pass the buck and take no responsibility for there actions. The people that do take responsibility are the people who will get ahead.
Posted by Discoverhater on 2006-04-18:
viperpa33s - Which credit card company do work for and/or which PAC (Political Action Committee) do you belong and/or contribute money to.
Posted by viperpa33s on 2006-04-18:
Discoverhater: lol, I got a quick giggle from that. Nice for you to assume something when you don't know anything about me. Because I say people need to take some responsibility, I am right away a evil person? I welcome other people's opinion and open for debate. I am a consumer just like yourself. I work very hard, take care of my 11 year old daughter. I work for a medium size retail company. I contribute to no one except to the Salvation Army, Veterans Administration, or some other needy organization that I believe in. Now that you know, are you willing to take back what you said or continue to make accusations?
Posted by Stew.old on 2006-04-18:
A fellow Libertarian, cool. Hugh, then you of all people should absolutely detest the credit card industry and be the first to call for a return to constitutional money.
Posted by Stew.old on 2006-04-18:
DiscoverHater: Great post! thanks
Posted by Coolcliftop on 2006-04-19:
These guys are tricky. Nowdays you are probably better off borrowing from the sharks down by the docks. It is easy to say just manage your accounts and be wary, but Dang it man... with all the fine print and clauses it is hard to keep up with it all. My suggestion is to maintain a small balance, check your account regulary, and call and complain a lot. My wife has been through many battles with the Visa customer service. They will give in if you have a good standing with them.
Posted by Timboss on 2006-04-19:
BLAME THE CREDIT CARD COMPANIES because
1. I didn't read the terms of the agreement 2. I don't know how to do arithmetic so I go over my limit 3. I wait until the last minute to mail my payment and hope it makes it 4. I try to pay just as little as I can so I will end up paying a whole lot more in interest that my original purcahse was 5. I kKeep charging til the cows come home regardless of my ability to pay. Damn credit card companies, slippery devils. Its not my fault.
1. I didn't read the terms of the agreement 2. I don't know how to do arithmetic so I go over my limit 3. I wait until the last minute to mail my payment and hope it makes it 4. I try to pay just as little as I can so I will end up paying a whole lot more in interest that my original purcahse was 5. I kKeep charging til the cows come home regardless of my ability to pay. Damn credit card companies, slippery devils. Its not my fault.
Posted by bill on 2006-04-19:
I have to agree with Viper and Timboss. Resposibility for all the things Discoverhater said does fall on the borrower. 2% is the minimium payment: you can and should pay more. If the finance charge puts you over your limit, then you were to close to the limit to start with. Give yourself a cushion. Pay the bill when you recieve it not the day its due. If doing any of these things is difficult you need to stop using the card.
Posted by makingmegopostal on 2006-04-29:
You posters that are on the side of the credit card companies apparently are clueless. When you sign up for a credit card you get a certain rate. You expect that rate to stay the same unless you do something stupid like pay late or go over your balance. Now the credit card companies will claim they periodically review your credit and if they think the balances you have on other credit cards are too high, or if you have had to many credit inquiries (which they are the ones doing it so as to check your credit), they raise your rate to the default rate. They are not acting in good faith and most consumers expect banks to have higher ethics as they are dealing with the livlihood of their customers. I honestly believe you people work for Bank of America which has skirted the law so as to get rich just like a loan shark. Bankers who used to have a high degree of respect are now below used car salesman and lawyers as far as ethical respect goes. So yes, I am guilty of trusting the bank to treat me with a high degree of fiduciary responibility/ethics that they used to hold sacred. Banks like Bank of America are equivalent to Loan Sharks. There is no other way to look at it. Blaming the victim for being naive and trusting them is just plain sick!
Note: All comments are reviewed by a moderator before being published. Please be sure to read our guidelines before commenting.
Company Reps: Post your company response!
Recently Discussed:
- Top 10 Consumer Friendly Credit Card List - Not on List (Chase, Bank of America, MBNA & Discover Card) Suprised???? - Credit Cards
- Does Anyone Have a LIBOR Based Interest Rate Visa or Mastercard Credit Card? - Visa and Mastercard Credit Card
- Consumer Friendly State Credit Card Laws - Avoid Predatory Charges - Discover Card, Visa and Mastercard - Consumer Credit Cards