WASHINGTON, D.C. – As the U.S. Senate prepares to vote on legislation limiting abusive and predatory practices used by credit card companies, U.S. Sen. Sherrod Brown (D-OH) and Ohio Attorney General Richard Cordray today outlined the need to protect Ohio credit card consumers.
“Ohioans have had enough of the abusive and predatory practices used by credit card companies,” Brown said. “Too many Americans struggle to pay their bills— they shouldn’t also have to worry about arbitrary interest rate increases or outrageous penalty fees. This bill would protect consumers by giving them clear information about the terms of their credit card agreements and restrict when credit card companies can raise interest rates or charge fees.”
“Ohioans are speaking out in great numbers on this issue,” Cordray said. “Thousands of them sent comments to my office saying that, in the words of one citizen, ‘Dealing with credit cards is like walking through a minefield.’ If individuals are to improve their own economic situations, we must make sure they have a level playing field.”
Brown is an original cosponsor of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 (S. 414), legislation that would protect consumers from abusive and predatory credit card practices. This legislation, similar to a bill passed by the House last week, is expected to be voted on by the Senate this week or next.
The CARD Act is aimed at protecting American consumers from excessive debt and deceptive and predatory credit card practices. Introduced by Banking Committee Chairman Sen. Christopher Dodd and referred to the Banking Committee on which Brown serves, this legislation would increase transparency in the credit card industry by requiring enhanced disclosure of contract terms while improving billing and marketing practices.
Specifically, the legislation would prevent a change of contract terms during the term of the card agreement; allow consumers to close their accounts and pay off debts under the terms then in effect; apply increased interest rates only to subsequent debt and apply payments to the highest cost balance first; prohibit interest charges on debt paid on time (double-cycle billing); require bills to be mailed 21 days ahead of the due date rather than 14; prohibit interest from being charged on card transaction fees; prohibit the charge of a fee to pay off debt; prevent issuers from charging multiple over-limit fees; and improve disclosure and notice provided to cardholders.
Brown and Cordray released a county-by-county analysis showing the percentage of residents with a credit card payment delinquency of more than 60 days. In more than 30 Ohio counties, at least 2 percent of credit card holders residing in that county are delinquent in their credit card payments by 60 days or more. Last summer, Cordray collected more than 5,300 registered complaints from Ohioans regarding abusive and deceptive practices employed by credit card companies. City councils and county commissions representing more than 4.7 million Ohioans urged federal attention to this issue.
More than one billion credit cards are in use throughout the United States, and nearly 75 percent of American households have a general purpose card. These credit cards have contributed to $977 billion of revolving credit, with about 85 percent carried on credit cards and the remainder on gas and store cards. The average household carries $10,000 in revolving debt. Over the past year, the credit card delinquency rate reported by the Fed has risen by 42 percent. Yet each calendar quarter, credit card issuers make around one billion new solicitations. In 2005, the six largest credit card companies earned an estimated $7.4 billion in revenue because of late payment fees.