SENATORS SAY CREDIT CARD COMPANIES FAILING CONSUMERS

May 18, 2005

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Senate Banking Committee members and federal regulators yesterday called on credit card companies to better inform consumers about the potential costs and risks of long-term credit card debt, CongressDaily reported. “We all, I think, benefit from the credit card industry, but only if we know what we’re buying,” Banking Chairman Richard Shelby (R–Ala.) said during a hearing.

Shelby has not decided whether to address credit card marketing and disclosure practices through legislation, according to a committee spokesman. But Shelby said the panel probably will continue its examination of those issues after the Treasury Department releases a report this summer on the state of financial literacy among consumers. Sen. Christopher Dodd (D–Conn.) said credit card companies are making “more money than ever” by charging usurious interest rates and penalties.

“Credit card issuers … are turning credit cards into nothing less than wallet-sized predatory loans,” said Dodd, who is sponsoring legislation that would bar credit card companies from issuing credit cards to anyone under 21 years of age. His bill also would require credit card companies to provide more disclosure about interest rates, prohibit finance charges for on-time payments, and bar over-the-limit fees for creditor-approved transactions. Several credit card company executives said they do not engage in predatory lending and have taken steps to improve disclosure, the newswire reported.