Credit Card Reform MUST include credit card interest rates CAPS.

While the Banks are getting TARP Bailout money and Fed Reserve loans at 0% - they are gouging the taxpayer/consumer with interest rates of 20%, 29% and I recently read of 32% and higher!

Universal Default is especially outrageous. If the Consumer is in a dispute with another Lender or Utility company (because we Know there are never Billing Errors) - the consumer gets punished again by the Credit Card Issuer - who is just looking for any excuse to abuse the Consumer.

I appreciate Consumers Union and Consumerist here - in working to convince Congress that Consumers Deserve Change NOW.

Agreed, Credit Rate Caps are a must.

And Credit Line Decreases need to be controlled as well, average credit scores are tanking and the same lenders are using that to gouge consumers with higher rates.

Most of the CARD Act looks really good. But, I cannot say that I am a fan of restricting the access of consumers under the age of 21 to even small amounts of credit.

//soapbox
I got my first credit card, in my name only at the age of 19. It was a SunTrust student card with an initial limit of $500, 12.99% APR. No parental signature required. I got this card because I was interested in building my credit history. I know the APR wasn't great, but I did not care because I was paying off the balance each month. My entire school year income at that time was limited to Student-Work, so I only made $300 per semester, during summers, I would work retail jobs at $6.25/hr and save up what I could. I did not use the card to spend money which I did not actually have and I'm pretty sure that I was not making enough to demonstrate that I'd be able to pay off a maxed out balance on my own. Now, at 24, I have an outstanding credit score (only hampered because I haven't had credit for all that long) and own a single family home.

A successful credit card story mainly brought about because my parents taught me to be careful with money and credit. Many kids aren't lucky enough to have parents such as mine. May adults have gone overboard with their credit cards themselves, so why should they be considered trustworthy enough that their signature will make it more likely that the debt will be paid off? I have friends my age whose credit was just about ruined due to delinquent debt of their parents.It seems like this legislation reverses Fair Isaac's recent rule of discontinuing allowance of piggy backing on a parent's credit (saved my friend, btw).

This bit of the legislation is treating symptoms and not actually getting to the root of the problem. Young people don't need Big Brother holding their hands to keep them out of financial trouble. Young people need to be educated in how to stay out of financial trouble of their own volition and knowledge. Young people need training!

Financial responsibility training can be offered in short seminars, it can be snuck into math classes (Ae^(kt)). If people aren't trained , they'll still be financial idiots as adults.

Sure, restrict the credit card companies from explicitly preying on young people. But, please don't restict the rights of young people to build credit.

//end soap box

I think the caps should be just on past balances. That way they banks have some control(not that they earned it).

Let them charge whatever they want on future purchases- as long as I know what that money is going to cost me till the end. Then I can decide if I want to pay it or not.

@pal003: I agree. I personally don't believe anything over 20% should be legal. Here in Ohio, I am ashamed to admit, but my first car was bought through a "buy here, pay here" where my rate was a wopping 24.99%. I as so thrilled the day I made my final payment. Finally, I owned a car outright. THE NEXT DAY, fuel pump goes caput and costs another $00 to get replaced. Bought another car after that.

@ravensfire: Since the age of about 22, I have preached this as well. Financial training needs to be a REQUIREMENT for seniors about to graduate high school. Those who are about to enter into the real world and experience real money. I was fortunate enough to have a calculus teacher my senior year who had only 7 of us in a class and was able to blow through topic material so quickly, he could convey these sorts of things to us.

How about credit score reform while they're at it?

Maybe outlawing credit score checks for employment as discrimination.

How about removing the penalty for canceling a line of credit you have good standing in.

Makes no sense to be punished for something that you don't want or use.

My question to you all is how broad is the scope of your conversation going to be? Because aside from all the stuff covered in the legislation, I think there needs to be serious talk about more strictly regulating Fair Issacs Corp, Equifax and TransUnion. Is that on the table in any way?

@ravensfire:

My first card was a Sears card when I was 17 back in '87. I don't remember giving a fake DOB either. But it arrived with a $1000 limit... with me having no job!

Thankfully other than new tires for my car $300 I never did anything with card back then. I used a couple times over the years but for the most part, it just sits there keeping track of my zero balance :)

All the FICO is supposed to be is a statistical model of your credit behavior predicting the chances that you will default in the next year. They are designed by private companies to be accurate based on their view.

I don't think public policy should get in there and change what FICO determines the statistics are. It one companies attempt to review your file mathematically. I personally think that they over emphasize things like using utilization that doesn't take into account your income.

It really is the banks that depend on the scores too much, they seem use the score exclusively. It doesn't seem to have worked for them. One problem is that FICO scores were not that helpful in the mortgage fiasco. Also, it is not helping them with credit cards. The banks that want to start making profits might be better off looking at other things besides the FICO. They will have to think a little.

@ravensfire: I have paid my balance off in full virtually every month except maybe once or twice for the last 15 years or so. And I too liked the ability to use a credit card to buy text books and pay for other things when I was in college, which I would then immediately pay off with my scholarship money.

However, and as anyone who ever watched the movie Maxed Out knows (www.maxedoutmovie.com), credit card companies prey on college kids. Even I wound up with many more cards than I needed when I was in college, usually just 'cause I wanted whatever free stuff they were giving away, shirts, free food, whatever... and that needs to be reigned in a bit. As I realized there was no way to keep track of all the cards I had, I eventually whittled them down. But I wish I'd never opened up so many lines of credit to begin with, and none of those lenders should've granted me nearly the amount of credit they did. I majored in Philosophy, for chrissakes.

If you are a good customer and have paid your bills on time, there should be a law against your interest rate going from 7% up to 15%

@pal003: Caps will result in less credit. No business will take on risk if there is no viable return. Why not let Markets dictate rates? If you are a good customer you get a a good rate if not you get bad rate.

In your model good customers will get max and risky customers will get nothing.

@jayphat: Agree!! Education is the key and without education it doesn't matter if you are 18 or 81 you will get taken advantage of.

As for age restrictions, kinda scary that at 18 (or less) I can get a gun but not a credit card????

@joepa1: Problem is, they are marking people as RISKY for things that have happened to other cards, even if they have been perfect with the current one. And there is such a thing as "reasonable" caps on credit. 30% interest is rediculus. i still think 25% is too high. 20 seems more reasonable to me, but so long as companies are allowed to muddle up the view with 350 page cardholder agreements, the market will never give consumers a fair choice.

Credit Card companies seem to keep pushing their greed to new levels that always hurt the people at the low end of the poverty scale, who are effected by the slightest financial fluctuation and are exacted the worst penalties. I am on disability and have 3 credit cards that I have been trying for the last 2 years to pay off, but can't. I earn $12,000 annually and these guys have pulled some really dirty tricks, with fees, over balance fines, because their fees caused an over limit. I can't win. Mr. President, pay off low income debt, free these slaves. I'll never get a card again!

@jayphat: Easy solution...don't use the card and you won't pay 30%, 20% or 0%. Where is the individual accountability? I guess I was lucky to be raised in a house where we were taught to live below our means.

However, since we can;t ask for accountability install a cap and the banks will shut down credit to those who can't afford it. For those folks there's always the pawn shop.

The thing I'd like to see is change to the way the contracts are administered. If I can't change the terms of my agreement willy-nilly, they shouldn't be able to either. That seems to be the core of the issue, and I think would solve most of the problems. Make it so there's a two or three year period that the terms have to stick and can't change.

Otherwise I want the ability to charge them fees willy-nilly. If I'm on hold with customer service, it's a $35 non-sufficient service fee. A store doesn't take my card, a $50 non-payment fee, and my interest rate is automatically lowered to 0.39%. Want to send me a paper bill, that's a $3 monthly service charge. You want payment by mail, $5 service charge. There's a $10 convenience fee for online payments. I also want double cycle payments, where payments apply retroactively over the last two periods.

@joepa1: Limiting the availability of credit card debt would be beneficial. The capital would be put to better use in markets where the money would be used to invest in businesses. Price controls can actually server a good purpose once in a while.