Last month, by a vote of 357-70, the U.S. House of Representatives passed a bill known as the Credit Card Holders’ Bill of Rights. The bill would prohibit such practices as sudden or retroactive interest rate hikes and double-cycle billing. It would also bar kids under 18 from getting credit cards, a provision that most parents of college students would surely support.
The Senate is now considering the bill, and, as you might expect, the credit card companies are lobbying fiercely to block its passage. And they have lots of our money to fund their lobbying.
Credit card reform is one of President Obama’s pet projects, and he is fighting to get the bill passed by the Senate and on his desk by Memorial Day. “Americans know that they have a responsibility to live within their means and pay what they owe,” the President said in his weekly radio and internet address today. “But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties and hidden fees that have become all too common.”
Who could argue with that?
Edward Yingling could. The president and CEO of the American Bankers Association said the group “strongly believes that any additional legislative efforts should strive to achieve the right balance between enhancing consumer protection and ensuring that credit remains available to consumers and small businesses at a reasonable cost. We continue to believe that more work needs to be done to achieve that balance.”
I’d like to tell Mr. Yingling – in a time-honored Jamaican phrase – where to look for his “right balance,” but this is a family blog, so I will bite my tongue.
As the President said, the best policy is to live within our means. I think the best advice is not to use credit cards in the first place. Anyone with a few grains of sense would cut those things in two the moment they arrive in the mail. Ditto for those “checks” they mail us, hoping to trap us in their web of debt and usury. Wouldn’t it be nice if I had enough sense to follow my own advice?
Now, I know some sensible people who use credit cards. They like the inducements, such as free airline miles, and they figure that if they pay off the total every month there will be no interest. But I am not so sure about that. We paid off our Citibank balance recently and to our surprise got another bill. It was only a few dollars, but it was annoying because we took care to pay off every cent of the previous bill’s total. The company explained they calculate interest daily, so I suppose the extra interest accumulated while our check was in the mail. I’m sure you can guess where the pieces of Citibank’s credit card ended up following that phone conversation.
It seems the credit card companies are getting more aggressive every day, finding new ways to separate us from our money. So Sandra and I have decided they’re too clever for us and we would be better off without using credit cards at all. Neither of us paid enough attention in math class to deal with convoluted concepts like double-cycle billing. As I understand it, credit card companies using that method calculate your finance charge based on your average daily balance not only for the current billing cycle but also for previous billing cycles.That doesn’t sound fair to me, but – as I said – math was not my best subject.
With those “Blue Dog” Democrats in the Senate siding with Republicans to help Big Business fleece consumers, President Obama faces tough opposition in this fight. If you have time, you might want to let your senator know how you feel about credit card reform.