Home Delivery

Credit crunched?

It's a good time for Congress' proposal to protect cardholders from bank greed

May 9, 2008

Article tools

E-mail

Share
- Digg
- Del.icio.us
- Facebook
- Fark
- Google
- Newsvine
- Reddit
- Yahoo

Got a credit card? If so, this one's for you. Washington wants to curtail some of the more insidious ways that banks dip into your pocket in exchange for allowing you to buy now and pay later. With the economy slowing, new rules to rein in unfair, deceptive credit practices would provide a bit of welcome relief for consumers burdened by debt.

Ever had the interest rate suddenly go up on your existing card balances for no readily apparent reason? Or had the interest rate soar on a card that you've never once paid late, only to be told it's due to a late payment on some other, unrelated account?

Have you noticed that credit card payments are often applied to the portion of your outstanding debt with the lowest interest rate, leaving higher interest debt to pump up the bank's take?

Those practices and more would be limited by the Credit Cardholders' Bill of Rights, sponsored by Rep. Carolyn Maloney (D-Manhattan). Similar legislation is pending in the Senate. The Federal Reserve weighed in last week with similar rules it wants to impose administratively. But administrative rules can be easily changed or eliminated. These protections should be given the force of statute.

The American Bankers Association sees things differently. It said the new restrictions would make credit cards harder to get and drive up the cost of credit. And if consumers don't like one card's policies, they can take their business to any one of the 6,000 institutions that offer credit cards.

But arbitrary interest-rate hikes and hidden fees already cost consumers plenty. Maloney's bill would make the cost of credit more predictable and stable - a big plus for the three in four American families that use credit cards.

Get breaking news | Most popular stories | Dining and Travel deals all via e-mail!

Would you recommend this?

Rate it: