It looks as if credit card companies are under the scanner of the Democratic led Senate. Credit card issuers of late have been under the microscope of not only the Congress but consumer groups as well. The card companies have been under scrutiny by the lawmakers for making sudden changes in interest rates in many cases without merit, which encumber consumers further.
The woes of millions of consumers who have had consumers credit rights dictated to them by card companies are seeking redress. For too long, the nexus between credit card lobbyists and lawmakers has produced watered down consumer credit protection legislation. Such special interest filtered laws have produced weak consumer protections that have led Americans to being slaves to compounding interest rates, hidden fees, and inscrutable terms.
As such, consumer groups have long lobbied Congress to have fair and just credit card protection laws. Many have pushed for a Consumer Bill of Rights. Without proper consumer protection laws to rein in abusive business practices, credit card companies have come to believe that they are accountable to none.
Herein, under pressure from consumers and consumer groups, the Senate is paying heed. The first week of December, saw the Senate Permanent Subcommittee on Investigations, a subcommittee of the Senate Committee on Homeland Security and Governmental Affairs hold a hearing with a focus on unfair interest rate increases.
The subcommittee hopes to explore practices of credit card companies that seem to show a pattern of exploitation of consumers. The main issue being examined is the sudden hike in interest rates by card companies for even individuals with good credit and payment history.
Most importantly, the subcommittee will attempt to understand the basis for the policy of interest rate hikes for cardholders who are in compliance with contractual terms of their credit cards.
It seems that the credit card companies promise a certain interest rate in the original terms and expect the cardholder to fulfill their end of the contract, while card companies feel they have no reciprocal obligations under the original contract. They seem to erratically change interest rates and terms of the contract at will just because they include in the original contract a statement, terms of contract subject to change without notice. This is unjust and unfair to consumers. Even if a written notice is provided, it is veiled in complex legal terms that cause even seasoned Financial Advisors to scratch their heads. Then how is the average American consumer excepted to understand the change of notice, let alone the original contract.
No wonder, so many Americans are using credit cards, as if they didnt understand fully how these instruments of debt work. Most likely they dont understand the complexities of plastic money, growing their credit card debt daily. Today, many consumers seek credit help of credit counselors , debt counseling or debt consolidation experts to get out of mountains of credit debt. In some cases, seeking credit repair, improve credit scores, and credit relief from consumer credit programs.
Hence, the issue of interest rates hikes and the credit card company policies supporting them are just the tip of the iceberg, Congress needs to delve into the crevices of all the practices of card companies. Consumer interest can only will by examination of and an end of unethical practices by credit card companies.