Credit Card Practices Bring Calls for Reform

A consumer finance expert says financial services companies ?have not played fair with American families? and applauds Sen. John Kerry’s pledge to curb credit card lending abuses.

Harvard law professor Elizabeth Warren says the credit card industry is the only business she knows of in which the seller can unilaterally change the price of a product after the purchaser buys it.

?The rule today is that credit card companies can quote you an interest rate at the time you use your card to buy a washer and dryer, and then four weeks after you get it home they can decide that that 9.9 percent rate should be 29.9 percent,? Warren said.

?They bury enough language in the fine print about their ability to change the terms, and then they put an arbitration clause in so you can’t take them to court over it. And then the customer is just stuck.?

Kerry, the Democratic presidential nominee, said last Friday that he would propose to end such practices through legislation that would require notice before rates were increased and would limit increases to a few percentage points.

Kerry also proposed requiring credit card lenders to prominently disclose how long it would take cardholders to pay off their balances and how much interest they would be required to pay if they made only minimum monthly payments.

The proposals are similar to bills blocked in recent years by the credit card and banking industries.

For this complete story, please visit Credit Card Practices Bring Calls for Reform. (Free registration is required)