The U.S. Senate Committee on Governmental Affairs has opened an oversight hearing on the credit card industry. Senators Levin and Coleman expressed concerns that credit card companies are designing interest rates to "entangle unsuspecting consumers". The committee focused its attention on the risk-based pricing of credit cards and the adequacy of disclosures.
On consumer witness at the hearing testified about a Chase credit card on which he charged $3,200 in 2001, and never charged on the card again. The consumer paid $6,300 to Chase before Chase forgave the remaining debt, just before the consumer testified to Congress. Had Chase not forgiven the remaining balance, the consumer would have paid another $6,300 to pay off the balance. Chase representatives at the hearing apologized to the consumer for "human error" causing the company to fail to recognize the "financial hardship" the consumer faced. How likely is it that Chase would have taken this action if the consumer were not testifying before Congress?
Citi Card representatives volunteered to eliminate the"universal default" proivisions in their cards (where a default by a consumer on a non-Citi obligation entitles Citi to increase the consumer's interest rate to default rates), and to also eliminate the "anytime for any reason" increase in interest rates.
But for Congress's investigation of these typical credit card industry abuses, the credit card companies would continue their predatory business practices on consumers. The likelihood of further consumer related Congressional investigations gives hope to consumers who have been abused by the credit card industry for far too long.