WASHINGTON (12/6/07)—Sen. Carl Levin (D-Mich.) said at a hearing this week that he will keep the heat on a credit card system that he believes engages in practices that are unfair to consumers. As chairman of the Senate Permanent Subcommittee on Investigations, Levin conducted a second hearing Tuesday on credit card practices zeroing in on the circumstances under which credit card issuers may increase the interest rates of cardholders who are in compliance with the terms of their credit cards. In March, the subcommittee examined credit card grace periods, interest charges assessed against debt paid on time, and excessive fees. Many credit Levin’s efforts with inspiring changes at the card companies who appeared before him on the witness stand. At that time, he criticized a JPMorgan Chase representative for his company’s practice of assessing repeated over-the-limit fees. The company dropped the practice soon after the hearing, although it attributed its action to a reevaluation of customers’ needs and not to the political environment. Citibank, also on the March witness list, announced at the time that it had changed its repeat-fee practice. Levin opened this week’s credit card hearing by reviewing the woes of his first panel of three consumer witnesses, which included:
* Retroactive interest rate increases; * FICO score drops resulting in card interest rate increases; and * The difficulty of understanding credit reports and the causes of interest rate increases.
Levin, with co-sponsor Sen. Claire McCaskill (D-Mo.), has introduced the Stop Unfair Practices in Credit Cards Act (S. 1395), which would, in part: Prohibit interest on debt paid on time; prohibit interest charges on any portion of a credit card debt which the card holder paid on time during a grace period. prohibit added interest charges on credit card debt which the card holder paid on time and in full; limit on penalty interest; allow interest rate increases only to future debt; and prohibit the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees. Credit card industry witnesses included representatives from Capital One, Discover and Bank of America.