The Government Finally Takes Action

It is very difficult to know who are the bigger crooks, the oil companies or the credit card companies. Both of them take advantage of consumers, and they both charge rates that are not only exorbitant, but should be illegal.

For a long time the British have accepted the abuse dished out by the credit card companies. This is because the convenience of having a credit card outweighed the disadvantages and the interest rates. However, consumers in the USA have finally taken notice that they are being robbed and literally being “taken to the bank.”

On Thursday June 7 th, American lawmakers admitted that stronger actions are needed to prevent foul practices from the credit card business market. The long hearing had members of the House Financial Services subcommittee agreeing that these companies are not only deceiving consumers, but also preying upon them. The major players sent executives who remained defensive when they were questioned by a bipartisan committee.

Research indicates that the average British family carries a balance of £7,000 on one or more credit cards. That is just the tip of the iceberg of a billion pound credit card debt that the British people collectively owe. New York congresswoman, Carolyn Maloney, has voiced the opinion “that we will see a perfect storm in consumer credit as these pressures converge on British and American people and that the ripple effect will be felt throughout our whole economy.”

What Does the Government Plan To Do

The changes that have been proposed were issued last month. These changes include requiring that credit card companies give the consumer at least 45 days’ notice before making any of the following: changes to the terms of your account or raising your interest rate for missing a payment or for not paying the minimum due on your account in a timely manner.

Several of the lawmakers think this is a good way to proceed. However, those individuals in charge feel they should band together to stop all abusive practices completely. FDIC chairman Sheila Bar admitted that she is not persuaded that complete admission will take care of all of the problems with the credit card companies.

The Federal Reserve is considering what other measures can be taken. The central bank is concerned about any action that may have “unintended consequences” on the buyer-lender market.

Many high ranking officials support the idea of legislation giving power to them in order to control and ban any practice they judge is not fair or is deceitful to the consumer.

Legislation put forth by Democratic officials would prohibit some of the billing and interest rate procedures implemented by many credit card companies. This would ban the practice of raising interest rates during the grace period when the customer has paid on time. This usually occurs when a customer is late on a payment that they owe to a separate company, and not the one in question. This practice is called “universal default.” You may notice, sometimes quite by accident, that your interest rate has risen dramatically on one of your credit cards.

The crunch may be finally getting to the American public. In April, consumer borrowing revealed the lowest increase in six months. Many even paid some of the debt they owed. The people may be beginning to realise what the credit card companies are really doing to them. They may also have no money left to pay even the minimum amount due to their out of control spending.