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A fellow Nebraskan recently sent me an e-mail saying he felt like he’s being taken advantage of by his credit card company. The company had been increasing his interest rates for no reason to the point he was now paying nearly 24% interest on the balance. It made it difficult to pay anything on the principal because his entire payment was just to pay interest.
When he complained to the company he was told that they notified him on one of his statements that he had the opportunity to freeze his interest rate at the time and close the account but didn’t do so. He didn’t do so because the notice was tucked away in a lengthy legal attachment that few people would read or understand.
Stories like this from Nebraskans who play by the rules, are on time with their payments, keep balances low and manage their credit in order to maintain a good credit score are, unfortunately, all too common.
Eliminate Unfair Practices
It’s time to impose tougher rules on credit card issuers to protect consumers from some unfair practices that have emerged in recent years which is what the Credit Card Accountability Responsibility and Disclosure Act of 2009 will do. It places tough new restrictions on credit card companies and protects card holders from arbitrary rate hikes and other deceptive practices.
It also cuts down on excessive fees that companies charge for making online payments and would require companies to be clearer about how long it takes to pay down a balance when someone makes only the minimum payments.
The bill protects consumers from arbitrary interest rate, fee and finance charge increases and prohibits universal default on existing balances.
It puts a stop to interest charges on paid-off balances from a previous billing cycle which is also known as a double-cycle billing ban.
It will require payments to be applied first to the credit card balance with the highest interest rate.
It provides protection for students and other young consumers from aggressive credit card solicitations.
A Victory for Consumers
The bill is being hailed by consumer advocates nationwide as a huge step for individuals over companies that are taking advantage of their customers.
As one of my colleagues so aptly pointed out, when 10,000 families are losing their homes every day and 20,000 losing their jobs, the idea that credit card companies will go along and raise those interest rates and add on fees is outrageous, and it affects every demographic group of Americans all across the country.
This bill, which enjoys strong bipartisan support, gives consumers a chance to have a more equitable relationship with their credit card company while preserving the basic framework of a credit system that is integral to America’s economy.
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