CNN has the highlights of the Senate Credit Card Hearing and Senator Dodd issued the smackdown WWF (WWE?) style:
“If you currently engage in any business practice that you would be ashamed to discuss before this Committee, I would strongly encourage you to cease and desist that practice. Irrespective of the current legality of such practices, you should take a long, hard look at how you treat your customers.”
Oooh, he’s talking a mean game.
During the hearing some problems with the credit card industry were highlighted by consumer advocates who called for banishment of the following:
•Universal default pricing: With this policy even if you have a sterling payment record on your card account, your issuer may jack up your rate if you’re late on bills on other accounts or if your credit score falls. The number of issuers with this policy has gone down recently.
•Double-cycle billing: If you charge $1,000 one month, and pay off $900, a bank may charge you interest on the full $1,000 in the next month and beyond until the remaining $100 is paid off. Carter Franke, executive vice president of marketing at JP Morgan Chase, said that due to customer confusion, the bank decided very recently to end its practice of double-cycle billing. She did say, however she didn’t feel it was an unfair practice, likening it to a bank loan, where you start paying interest immediately on the full amount, not just a portion of the principal.
• Zero-tolerance late payment policies: Tamara Draut, director of economic opportunity programs at Demos, noted that customers who may be a day late or even an hour late in their payment are often hit with the same $35 late fee as customers who might be three months’ late. Being subject to a couple of late fees may also result in a penalty rate imposed on your account, which can top 30 percent. And that punitive rate may then be applied not only to future purchases but to an existing balance as well, effectively boosting the cost of the cardholders’ past purchases.