http://www.washingtonpost.com/wp-dyn/content/article/2007/03/07/AR2007030700236.htmlSenate Panel to Examine Credit Card Fees
By MARCY GORDON
The Associated Press
Wednesday, March 7, 2007; 11:48 AM
WASHINGTON -- A Senate panel today is examining complex billing and interest-rate practices for credit cards that critics say confuse consumers and can push them deeper into debt.
Sen. Carl Levin, D-Mich., chairman of the Senate Homeland Security and Government Affairs subcommittee, said an investigation by his panel found "abusive" and confusing practices by credit card companies that can increase financial pain for many families. "The penalties are repeated and they keep you in debt," Levin told reporters in advance of a hearing Wednesday at which major credit card issuers were expected to testify.
While the credit card practices in question are legal, Levin is threatening possible legislation to outlaw them as a spur to the banking industry for voluntary changes. Scrutiny from Congress in recent months of the credit card industry already has caused several major banks to begin to eliminate or temper some of those practices, said Levin, who was joined at a briefing by Sen. Norm Coleman of Minnesota, the panel's senior Republican.
Stricter rules for banks laid down by regulators such as the Federal Reserve also may be needed, the two senators said.
Senate Banking Committee Chairman Christopher Dodd and other Democratic senators challenged credit card executives at a hearing in January over rising late fees and other penalties and marketing practices they portrayed as predatory. Dodd, D-Conn., said he was putting the industry on notice that if it doesn't improve practices on its own, legislation may be warranted.
Since Democrats assumed control of Congress in January, they have put a number of consumer issues on the legislative agenda. With Americans weighed down by some $850 billion in consumer debt, the practices of the robustly profitable credit card industry is a compelling subject for scrutiny.
Levin and Coleman denounced practices they said brought in tens of millions of dollars to banks issuing credit cards, such as charging interest on balances that are paid on time but not in full, and so-called double-cycle billing, which eliminates the interest-free period of a consumer who moves from paying his full balance every month to carrying a balance.
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