The House of Reps passed the Credit Cardholders' Bill of Rights today by a vote of 312-112.
The White House agrees that there are abusive credit card practices, but opposes the cardholders' rights bill for fear that it could further discourage lending.
The American Bankers Association agrees. Edward L. Yingling, ABA president and CEO, said:
Ed reminded consumers that the bill is not a bailout, "it simply bans the banks' worst unfair and deceptive practices."
I understand all the hullabaloo over discouraging lending and how restrictions could make it more difficult to get loans, especially now during the current market crisis. But, I gotta say, I believe we need to ban abusive card practices. Why? Look at the 31,000 letters of complaints the Federal Reserve received about this issue.
I think we need to go back to the days when consumers, especially college students who aren't making any money at all, didn't get an instant line of credit just for breathing. If I'm not making any money at all, I have no business being approved for a credit card on my own.
If I'm religiously paying my credit card bill, but miss a utility payment, the credit card company shouldn't automatically punish me by jacking up my interest rates -- making it more difficult for me to pay them back. If I'm always paying the credit card company on time, they shouldn't arbitrarily change the due date for my bill to trip me up. If I'm only approved for $500 or $5,000 on my credit limit, a card company shouldn't approve a charge that takes me over that limit and then whack me with more fees for going over. (yea, yea, as a consumer, I also shouldn't be spending so close to my limit either. I'm not a one-way street, only blaming companies. Both sides need to take responsibility here.)
Am I making any sense here? Why take on the risk that adding more to my bill will make it harder or impossible for me to pay back my debt to you?!
Why make it that much harder for consumers to pay you back, unless you're trying to grow rich off of fees and penalties you charge consumers for whipping the rug out from under their feet?
(Photo by Nhat V. Meyer/San Jose Mercury News)