Outside editorial: Charge into reform of credit card fees

Posted: Friday, March 09, 2007

This editorial appeared in the Detroit Free Press:

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While he gets most of his attention as one of the chief critics of the conduct of the war in Iraq, U.S. Sen. Carl Levin is plunging into a domestic issue of enormous impact for Americans: abusive practices by credit card companies.

Dissatisfied with the industry's response to the disturbing findings of a Government Accountability Office investigation of credit card practices that he ordered last year, Michigan Democrat Levin will hold a hearing in Washington on Wednesday on credit card fees, interest rates and grace periods, with an eye on federal legislation if credit card issuers don't stop taking unfair advantage of consumers.

True, no one forces you to use plastic instead of cash, but the industry sure does a better job of encouraging it than of explaining the costs. Abusive credit card practices have contributed mightily to consumer debt, especially as credit card use has exploded in recent years.

Consumers now use 700 million cards annually to buy nearly $2 trillion in goods and services. The average household carries more than $5,000 in credit card debt with few consumers understanding all the interest and fees they are subject to by not paying off each month's balance.

The hearings should prod credit card companies to better explain the cost of using plastic, but Congress ultimately might have to ban certain practices to really protect consumers.



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