Recently, Democratic lawmakers raised a question we have all been asking for a long time: why are credit card late fees and other penalties continually increasing at such a fast rate? On the 25th of January, these practices were brought into question at a Senate Banking Committee session. Many of the panel members are interested in legislation that will require credit card companies to provideconsumers with more detailed information regarding credit card policies. This includes disclosing how long it will take the consumer to repay the debt if he or she pays only the minimum monthly payment each month.
Among the credit card companies that were represented at the session were Chase Bank USA, Capital One Financial Corp, and Barclays Bank. Executives from each of these companies were a part of the panel of witnesses being questioned by the committee.
Although the credit card industry still claims to be simply providing a much needed service to consumers and to the economy, they have acknowledged that the information that they supply to their customers probably could be a little less confusing. Shocker, right?
According to a report created by congressional investigators, the average fee for a late payment averaged $34 in 2006. This is $21 dollars more than what consumers were paying in 1995.
Senator Christopher Dodd put out somewhat of a threat to the credit card industry during the session, stating “I would like to put the credit card industry…on notice. If you currently engage in any business practice that you would be ashamed to discuss before this committee, I would strongly encourage you to cease and desist that practice.”
Dodd went on to say that credit card issuers “should take a long, hard look at how” they are treating their customers.