Chase Manhattan Bank Informative - Please help no matter what state you live in you can have input
MICHIGAN -- Dear Mrs. Osborn:
In light of your past correspondence, I thought you might be interested in knowing about a hearing I chaired yesterday entitled “Credit Card Practices: Unfair Interest Rate Increases.” As you may know, this is the second hearing that has been held as part of the ongoing investigation into unfair credit card practices I initiated as the Chairman of the Permanent Subcommittee on Investigations.
Yesterday’s hearing focused on credit card issuers who hike the interest rates of cardholders who play by the rules. These are cardholders who pay on time, pay at least the minimum amount due, and then wake up one day to find their interest rate has gone through the roof because their credit card issuer decided they should be “repriced.” Some credit card companies are foisting interest rates as high as 25% or 30% on responsible consumers, claiming they have become greater credit risks even when those same consumers haven’t missed paying a bill in years. To add insult to injury, credit card issuers apply those higher rates retroactively to consumers’ existing credit card debts, which were incurred when lower interest rates were in effect.
One of the three consumers to testify at the hearing yesterday was Janet Hard, a registered nurse from Freeland, Michigan. She shared her story with the Subcommittee about the Discover card she has had for several years. Although Ms. Hard had paid her Discover bills on time for years, never exceeded her credit limit and always paid at least the minimum amount due, in 2006, Discover increased the interest rate on her card from 18% to 24% out of the blue. The higher interest rate has made it more difficult for Ms. Hard to pay off her debt. Over the last twelve months, Ms. Hard has kept her credit card purchases to less than $100 and has made steady monthly payments of $200 to reduce her debt. At the end of a year, her payments totaled $2,400, but due to the higher interest rate, almost all of her money went to pay for finance charges. In fact, out of her $2,400, about $1,900 went to finance charges and she was only able to pay down her principal debt by only about $350. Further details on this hearing may be found on my website at: [http://www.levin.senate.gov/newsroom/release.cfm?id=288160].
Credit card companies are currently the only lenders permitted to retroactively change the interest rate on a consumer loan where the consumer has met their borrowing obligations. This unfair credit card practice needs to stop. In May, I introduced the Stop Unfair Practices in Credit Cards Act (S.1395), which would stop credit card interest rate increases except in four circumstances: (1) after the lapse of an introductory interest rate; (2) pursuant to a variable interest rate; (3) pursuant to the application of a previously disclosed penalty interest rate after a cardholder violates the credit card agreement; and (4) where the cardholder agrees in writing to the increase at the time it is proposed. The bill would also prohibit the application of higher interest rates to existing credit card debt. Instead, a higher interest rate could be applied only to credit card debt incurred after the increase took effect. If you would like to learn more about the other provisions included in this legislation, you may access my floor statement and press release at the following link: [http://levin.senate.gov/newsroom/release.cfm?id=274257].
Additionally, if you or someone you know would like to share a personal credit card experience with me for my investigation, please send an e-mail to [firstname.lastname@example.org]. If you would like help with a credit card problem, you may want to contact Consumer Action. Consumer Action is a national, non-profit education and advocacy organization that provides free, non-legal advice and referrals on a number of consumer issues, including credit cards. A complaint may be submitted to the Consumer Action hotline by telephone at: 415-777-9635 or through their online web complaint form at: [http://www.consumer-action.org/hotline/complaint_form/].