Sen. Daniel Akaka (D-Hawaii) recently introduced the Credit Card Minimum Payment Warning Act. It’s the third time he’s proposed the act, but with the federal government paying lots of attention to the credit card industry, perahaps he’ll succeed this time.

In a Senate floor statement made on April 20, the senator said his legislation would

“make it very clear what costs consumers will incur if they make only the minimum payments on their credit cards. If the Credit Card Minimum Payment Warning Act is enacted, the personalized information consumers would receive for their accounts would help them make informed choices about their payments toward reducing outstanding debt.

“My bill requires a minimum payment warning notification on monthly statements stating that making the minimum payment will increase the amount of interest that will be paid and extend the amount of time it will take to repay the outstanding balance. The legislation also requires companies to inform consumers of how many years and months it will take to repay their entire balance if they make only minimum payments. In addition, the total cost in interest and principal, if the consumer pays only the minimum payment, would have to be disclosed. These provisions will make individuals much more aware of the true costs of their credit card debt. The bill also requires that credit card companies provide useful information so that people can develop strategies to free themselves of credit card debt. Consumers would have to be provided with the amount they need to pay to eliminate their outstanding balance within 36 months.”

The bill also calls for creditors to provide a toll-free number for consumers to get “trustworthy” information on credit counselors.
While the various hearings that have been held since January have broadly criticized the credit card industry, there have been few, if any, suggestions on how to fix the problems. But Senator Akaka’s bill to make it clear to consumers how long it will take to pay off their particular balance seems to be a good one. His proposal provides debt counseling for indebted consumers, in a way.

Admitting — or knowing — how much debt you’re in is the first step toward getting help.

This entry was posted on Wednesday, May 2nd, 2007 at 12:14 pm and is filed under In the News, Chase, Discover, American Express, Mastercard, Visa, financial advice, capital one, Citibank, Bank of America. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.