The credit card industry has become a favorite punching bag for
consumer groups and lawmakers, who accuse the card issuers of doing
everything in their power to raise rates, charge new (and hidden) fees
and punish card holders with unjust policies.
The Federal Reserve Board has taken notice. It's proposed requiring
issuers to disclose clearer information about rates and fees and 45
days' (instead of 15 days') notice before they could raise rates.
Congress has stepped in, proposing bills to restrain some of the more
widely criticized policies.
The credit card industry says it welcomes better disclosure but opposes
curbs on its ability to raise fees or rates or change policies.
Consumers have yet to see any significant easing of fees and rates that
have sparked outrage.
The credit card industry has entered a quiet period since Congress set
its sights on credit card practices. Still, late fees and
over-the-limit fees have remained steady across the board.
The credit card industry is open to the idea of making policies easier
to understand. But card issuers oppose any steps that would restrict
them.
In its defense, the credit card industry contends that credit cards are
fairer now than before 1990, when most issuers charged a fixed rate of
about 20%. "There was less access to credit in America and higher
interest rates," says Ken Clayton of the American Bankers Association.
"Now, some 75% of American families have credit cards at lower interest
rates. And the ability to measure risk has allowed us to target various
markets that in the past may have not had access to credit."
Many consumers argue, though, that credit card disclosures are
confusing and that so many penalty rates and fees can apply, it's hard
to know how to avoid them.
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