Consumers were finally allowed this week to testify in favor of a proposed Credit Cardholders’ Bill of Rights without being forced to sign waivers allowing their creditors to release private financial records to the public. The three cardholders who testified lambasted their credit card companies for penalizing them even though they abided by their cardholder agreements.

Alpha Consumer, who was at the hearing, recounts:

[Susan Wones of Denver said one] of her Chase credit cards jumped from a 14.9 to 25 percent interest rate after she got close to, but didn’t exceed, her $6,000 credit limit. She said the interest rate on a second Chase card similarly shot up after she went $15 over her credit limit in the middle of a billing cycle, even though the beginning and ending balances were under the limit.

Susan’s testimony echoed that of fellow victim Steven Autrey, who said:

The NFL does not allow one team, in the midst of the fourth quarter, to unilaterally move their end zone 20 yards in their favor just because they don’t like the point spread. The rules are laid out before the kickoff, and the umpires enforce the same rules for both home and visiting teams for the whole contest. It’s time for legislation at the federal level that tells the credit card industry, “Game Over” to unilateral, one-sided, rule changes.

As a registered Republican, it has typically been my philosophy that business and commerce flourish and perform better with minimal government interference. However, when an industry sector proves time and again that it is unable to police itself and behave and engage in fair and ethical trade practices, legislative intervention is required.

The hearing started with a poignant warning from Senator Carl Levin (D-MI), the champion of similar legislation in the Senate. Ed Mierzwinski pulled these snippets from the Senator’s statement:

“credit card abuses faced by our middle class families add insult to injury …charging interest on penalty fees is wrong…contracts are totally incomprehensible…if this problem is going to be resolved it is going to be resolved here in Congress…The fed is looking at disclosures, it’s (looking is) endless.”

The two government agencies invited to testify took different positions. The FDIC hailed the measure as a pro-consumer piece of the legislation, while the Office of the Comptroller of the Currency’s representative crawled out from under the creditor’s table to declare her continued support for the smash-bang work of the free market.

The Credit Cardholders’ Bill of Rights is a wonder-packed piece of legislation that would:

• Ban arbitrary rate increases
• Force creditors to provide 45 days notice of any rate increase
• Ban double-cycle billing
• Empower cardholders to set limits on their cards and ban over-the-limit fees once that ceiling is reached
• Ban excessive fees
• Ban lending to subprime borrowers
• Require creditors to mail bills at least 25 days before the due date, instead of 14 days as currently required
• Require creditors to apply payments first towards high interest items

The bill currently has 101 cosponsors, which means that 334 Members still haven’t signaled their support for consumers. If your representative hasn’t signed on, call his/her office and demand an explanation.

The Credit Cardholders’ Bill of Rights: Providing New Protections for Consumers [House Financial Services Committee]
Live blog from credit card hearing [U.S. PIRG]
Credit Card vs. Consumer [Alpha Consumer]
HR 5244 – The Credit Cardholder’s Bill Of Rights [THOMAS]
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Credit Card Victims Muzzled, Ordered To Release Financial Histories Before Sharing Their Experiences
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