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Congress needs to affirm the Credit Cardholders' Bill of Rights Date published: 7/15/2008
WASHINGTON-- More and more Americans are turning to their credit cards to help pay bills, buy groceries, and simply make ends meet in this troubled economy. As a result, consumer credit card debt is now closing in on the $1 trillion mark--double the amount held in 1996. This trillion-dollar tower of unsecured debt is looming large and threatening to worsen an already perilous credit crisis.Recent news reports show that even as the Federal Reserve has cut interest rates to try to boost our economy, credit card companies have raised rates on cardholders--even those who pay on time--in an effort to plug losses they've suffered in other areas of their business. That's because the playing field between credit card companies and credit cardholders has become very one-sided in recent years. It's probably no surprise that American cardholders--not the big credit card companies--are the ones getting the short end of the stick. The winds of change appear to be blowing, however. In a historic move, the Federal Reserve recently acknowledged that there are unfair and deceptive practices in the credit card industry and proposed regulatory rules for doing away with many of them. Some of the practices the Fed identified as unfair and deceptive are the same ones that we have proposed curbing in new legislation, the Credit Cardholders' Bill of Rights (H.R. 5244). These include raising interest rates on existing balances--and doing so even to good cardholders who pay on time and never go over their credit limit; charging interest on balances that have already been paid off; unfairly allocating payments to make it difficult for cardholders to pay off higher-interest-rate balances; and marketing fee-heavy "subprime" credit cards to unsuspecting customers. It's encouraging that the Fed clearly agrees with the need for these balanced credit card reforms.
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