Credit Card Blog

The head of the American Bankers Association told a House panel Thursday the credit card industry is working to improve industry standards for disclosing all the fees, interest rate increases and penalties that can trap borrowers under mounds of debt.The ABA’s Card Policy Council, whose members include the major credit card issuers, is meeting weekly to come up with new industry disclosure standards that would help consumers understand and avoid costly credit card penalties, the group’s president and CEO Edward Yingling told the House Financial Services Committee.

The industry is taking to heart recent congressional complaints that many credit card holders are becoming hopelessly mired in debt because of unfair fees and interest rate changes, Yingling said. Two Senate committees held hearings on the matter in January and March and some lawmakers have introduced legislation to curb questionable billing practices by card companies.

“The industry recognizes that policies that alienate some of its customers or lead individuals into financial difficulty from which they cannot extricate themselves are in no one’s interest,” Yingling said.

The Federal Reserve, meanwhile, is working to revise its regulations governing credit card disclosure statements.

During Thursday’s hearing, Rep. Gary Ackerman, D-N.Y., held up a solicitation he received recently from one credit card company that promised zero percent interest. But in the fine print on the back, Ackerman said, the company revealed that customers could pay as much as 29 percent interest under some conditions.

Ackerman recently introduced legislation that would stop credit card companies from charging customers to pay their bills online or by phone.

While encouraging Congress to reform disclosure practices, George Mason University law professor Todd Zywicki also warned lawmakers against going too far in regulating the companies. Not too long ago, he noted, Congress was worried that credit card companies were excluding people with low incomes and minorities.

“Now we have multiplicity of options for credit for people who never enjoyed it before,” Zywicki said. “I am concerned that the wrong prescription could lead to a lessening of the availability of credit in the margins and perhaps making credit more expensive.”

This entry was posted on Friday, April 27th, 2007 at 8:52 am and is filed under In the News. 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.