Senate Banking Hears Testimony on Credit Card Abuses

by Deepak Gupta

A hearing before the Senate Banking Committee on “Examining the Billing, Marketing, and Disclosure Practices of the Credit Card Industry, and Their Impact on Consumers" is now underway. You can watch the hearing live on your computer at this link.

Guests include Elizabeth Warren, Leo Gottleib Professor of Law and author of The Two Income Trap: Why Middle Class Mothers and Fathers are Going Broke, Harvard Law School; Dr. Robert Manning, Professor of Finance and Author of Credit Card Nation, Rochester Institute of Technology; John Finneran , President of Corporate Reputation and Governance, CapitalOne Financial; Richard Vague, Chief Executive Officer, Barclaycard US; Carter Franke, Executive Vice President of Marketing, JP Morgan Chase & Co.; Tamara Draut, Director, Economic Opportunity Programs, Demos; and Travis Plunkett, Legislative Director, Consumer Federation of America.

Consumer litigator and NACA member Mike Donovan of Philadelphia will be testifying and sharing some client stories about the effect of credit card industry practices on consumers. You can read his written testimony here. With the new leadership in Congress, we can expect more opportunities like this one for consumer advocates to share their clients' stories--and hopefully bring about some positive legislation, after so many years of playing defense. (Thanks to Ira and NACA and Ed at U.S. PIRG for the tip.)

Comments

[Piper121]

Thanks for providing the link to some of the testimony. It is encouraging to see Senator Dodd take the lead in his committee. The credit card industry has gotten a free ride for way too long now.

I am particularly concerned with interchange fees, the 2-3 percent fee visa and mastercard skim off each purchase. These fees are outrageously hight but the worst part is that the credit card companies set these type of policies behind closed doors and most consumers don't know they exist. Let's hope Dodd and his committee will shed some light on these practices.

[Patti Gustafson]

I am appreciative that someone is watch-dogging this industry. They remind me of the "Carpet Baggers" of the south during reconstruction post Civil War. I can't believe what took place to my family after having a blemish-free credit history for 26 years. I live in Michigan. I am a Detroit Tiger fan. They had a very successful year. It was a Friday evening. I joined some friends to watch the Tigers beat the Yankees. I raced home to make a telephone payment. We live paycheck to paycheck and Friday was payday. I called at 20 min. past midnight. Just 20 minutes late! (October 2006) November 2006 I was an emotional wreck with news of husband and another women. I missed paying the payment.
I had misplaced the bill. With Thanksgiving and our anniversary I had a lapse in my mind. Is it alright if I had a bit of a break-down? Plus I am also bipolar and the stress triggered the need later for my medication to be adjusted. Chase raised our rates to 29.9% from 3.9% on $8000.00 Why is it you can never discuss the reasons something happened with this indusstry. I have never seen an industry be so punishing for small errors. Where else does this happen. Mortgage companies only charge a late fee. They do not raise you interest rates for a fluke accident. But no, the Credit Card industry can have a free hand to do as they please. We are human beings and have challenges in our everyday life from time to time. Would it be asking too much to have the opportunity to defend myself. My credit record for the past 26 years places us in the excellent range. Until now! If you can be of help Senator Dodd, or add us to the abuse we hard working americans endure from their injustices, I would be most grateful. Thank You, Patti G.

[Patricia Keeth]

I happen to live in Micigan where the economy is not the greatest right now. I am lucky I have a job, my husband on the other hand is layed off. We have a mortgage and car payment and three credit cards. I am happy to say we are never late to pay any of them as well as our other bills.
My story begins last a little over a year ago one of cards, Chase had raised my interst rate. I called and after a couple of months it was lowered to 7.99% I thought great! My credit limit with them was $7000.00 at the time. In Aug. of 2006 I recieved a letter from them that my credit limit was decreased to $5400.00 because I have high balances on some other cards. Okay so what I was making all my payments all that did was max me out. Which hurts your credit score!! The prior month my balance was $5409.40. I did not call or complain I thought why what is the point. I made a payment in Dec. 2006 of $1000.00 so that it didn't look so bad as well as I am trying to pay it off anyway. I just received my statement and to my horror they have raised my interest rate to 22.24%. When I called to ask why I hadn't defaulted in anyway the response was "because we can"! This is an outrage. How is anyone to ever pay the credit cards off? She also told me that "Maybe I should consider debt consoladation". I at that point cancelled my card with them and had the balance transferred to another card. I hope someone can look into these credit card companies and do something!

[Steve]

Oh stop...I can't see through the tears! You have got to be kidding me, why is this a responsibility of Congress?? You knew what you were getting into when you decided to charge more than you could afford!

What ever happened to personal responsibility in this country? Have a problem staying out of debt? Live BELOW your means! Pay cash and don't use a credit card! Don't want to pay high finance charges? Pay your bill on time and don't spend more money than you make.

Why does everyone think they are ENTITLED to everything? I want a new car and a boat and a house but I don't want to have to pay for it! Let's see I make $50K a year but I am going to go out and buy a $500K house and then cry and whine when I can't pay the mortgage. I buy a brand new car and then piss and moan when I can't afford to get my kids braces...guess what? Buy a used car or buy a bike...take the bus or the train...its obvious you cannot afford a car.

Didn't you just admit that you paid your bill late?? If you punch in at work at 7:20 when your start time is 7:00 aren't you still late?? Does it really matter if you are 20 minutes or 2 hours late? Are you then going to cry when you get fired for being tardy?

Obviously if you make late payments you are a higher credit risk. If you were to loan money to a friend and they didn't pay you back as promised will you loan them money again? I wouldn't...because they have proven themselves to be a high credit risk! What happens if they never pay you back? You eat the cost...its the same with the credit card companies.

I have never had this experience...do you want to know why?? I don't live beyond my means! I pay cash and/or don't spend more than I can afford to pay off at the end of the month!

[eric strong]

On october 26,2006 i made an arangement with Capital One to settle a debt i had with them of $5800 for the sum of around $5200. with payment to be made of $1687 to be due 11/9/06, 12/9/06 and 1/9/07. i have a letter stating this will satisfy my acount.
I called them a few days before the 11/9 payment and told them in good faith that I was a little short of my payment amount asking if I could change the payment date. I was told this was no problem and it would still keep my settlement in place. I schedualed payments of $1687.33 to be made automaticly on 11/22, 12/22 and 1/22. which were taken from my acount on those dates. as of 3/27/07 I show a balance of $1088 acruewing intrest and late fees. When I called capital One, after being on hold for half of an hour, I was told I broke the settlement and still owed the money. how can they take the money from my account and not honor the agreement???????

[Cara Fletcher]

Im not very familiar with credit cards so this would be interesting for me to watch.maybe I'll find some new things I don't know and might be of use.

[Greg]

When I arrived at college, Wells Fargo was handing out credit cards. So I got one. It had a limit of $700, which I promptly charged up. For some reason I was under the impression that if I made the minimum payment I would eventually pay it off. I set my Wells Fargo checking account to auto-pay $25 a month. About 5 years went by. The card was in collections as I continued to pay $31 a month on it, $1 of which went to the principal, so by my calculations I had paid the card off 3 times over. I know credit doesn't work like that and I did take responsibility for it, but still I felt rather taken advantage of. I just wish that there was some kind of disclosure/warning made to me back when I was 18, that if you pay the minimum balance, you will never pay this off and you will damage your credit. Ultimately when I finally got around to dealing with them, my balance was at around $2500 and I think we settled for a little less than that. So I opened a credit card with a limit of $700 and altogether ended up paying Wells Fargo about $4000. I'm happy these companies are getting grilled about it because these kinds of scenarios should not be allowed to happen.