All Presidential candidates should have a plan to wean America off its credit card dependence. We collectively owe almost $1 trillion to credit card companies, but only the Democratic candidates have written plans to reform the credit card industry. Alpha Consumer wrote an excellent summary of their competing plans to strike at some of the industry’s most harmful practices.
- Cap credit card interest rates at 30 percent. (The Government Accountability Office reports that 1 in 4 credit cards charges higher rates.)
- Stop credit card companies from increasing rates without written consent from consumers and prevent rate increases because of missed payments on unrelated accounts.
- Require card companies to explain terms and fees clearly to consumers.
- Increase government regulation of credit cards and other credit products through the creation of a Financial Product Safety Commission.
- Create a five-star rating system for credit cards so consumers have a better sense of the fees and rates associated with each card. Card companies would have to display their star ratings with their application materials.
- Write a credit card “bill of rights” that would stop credit card companies from making “unilateral” changes to the terms of cards as well as apply interest rate increases only to future debt. It would also stop card companies from charging interest on fees, something the Clinton plan includes as well.
We are greedy and want elements from both proposals, but consumers would win under either plan. Disappointingly, none of the remaining Republican contenders seem to care about credit card reform.
By the way, if you feel like adding to our $943 billion revolving tab, all campaigns accept contributions by credit card.