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Senate takes on consumer credit
Capitol Hill at sunrise
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TEXT OF STORY
Renita Jablonski: The Senate Banking Committee today will consider a set of consumer credit protections. The economic crisis is putting new momentum behind regulations that lenders aren't too happy about.
Marketplace's John Dimsdale has more.
John Dimsdale: The Senate bill would prohibit universal default. That's when trouble with one credit card ends up raising the rates on all the cards in your wallet.
Linda Sherry is with Consumer Action:
Linda Sherry: And we think its terribly unfair the fact that the card in question, on which you may not even have been late once and have been paying as agreed, can raise your rate because of that.
But credit card issuers say the Senate's restrictions will hinder their ability to charge borrowers for the risk that they may not pay back their loan.
Scott Talbott with the Financial Services Roundtable says the result will be higher interest rates for everyone.
Scott Talbott: If you clamp down on the ability of the industry to price risk based on the consumer's ability or their risk profile, then what will happen is those with better credit scores will end up subsidizing those with lower credit scores.
The Senate failed to pass similar credit card protections last year, but the bill's sponsors say the economy's decline, as well as a more sympathetic White House, means the bill is likely to pass this year.
In Washington, I'm John Dimsdale for Marketplace.
I have two wishes.
1) End the practice of charging late fees when borrower pays interest on the borrowed funds!
2)Simplify interest calculations nobody can understand! Compounding interest costs on a continuous aor daily basis is absurd if customers are unable to calculate their interest costs. Convert daily compouding to monthly compounding rates.
Credit lending contracts are the product of the work of lawyers and accountants that structure their contracts to trip up the borrower so they can blacklist people who are really credit-worthy. Credit has become an abusive legalistic game played to milk us.Predatory practices developed in the last 20 yrs need to end so we can get back to economic essentials!
Banks are trying to make up for lost revenue in other parts of their businesses by raising credit card rates. It is not illegal but it should be...its usury. I recently joined a voting bloc at http://votingbloc.org/Credit_Card_Rights.php
In order to help put pressure on my representatives in Congress to pass this bill!
