Monday, October 23, 2006

Beware the Sharp Teeth of Your Credit Card--"What's in YOUR wallet" might bite

(NOTE 1: Radio talk show host Dave Ramsey would approve of the content of the article cited above).
(NOTE 2: The first sentence of the second paragraph has been rewritten; the first iteration was too general and too harsh).

A General Accountability Office (GAO) study looked at fees, interest rates and disclosure practices of 28 popular credit cards. Among the findings: fees have more than doubled over the last decade to $34 and interest rates approaching 30% in certain situations where payment is late or credit limit has been exceeded.
Senator Carl Levin (D-MI) harshly criticized credit card issuers for excessive charges and poor disclosure, intimating that issuer greed was damaging working families. GAO findings were not always as harsh as Senator Levin: interest rates were usually under 20% and many users paid little or no interest by making timely monthly payments. The GAO was considerably more critical of disclosure practices: citing obscure language, small payment and failure to clearly indicate all potential charges as examples.

I have little enthusiasm for the practices of credit card issuers--while motor vehicle branches have sometimes been used to make the case to libertarism; the more predatory of credit card issuers might conceivably be used by socialists to support their ideology. The latest bankruptcy bill, though probably good overall, definitely had a blind spot in the treatment of credit card issuers. I generally do not call for more business regulation--in this case, however, even Republicans should look more closely at significantly improving required credit card disclosures and limiting some of the other more aggressive/predatory practices of many credit card issuers.


Blogger DEBTective said...

Bub, just wanted to drop a line and say a big-time thanks for spreading the word about how credit cards are nothing but trouble. The sooner joes and jills learn to deep-six their debt, the sooner they get on track with the dough. Way to go, baby.

1:46 PM  

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