Policing the plastics
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Policing the plastics
This week, the Federal Reserve issues it’s January consumer credit report. And we are in debt up to our eyeballs. Altogther, we owe more than $2 trillion.
That news came on the same day as Congress held hearings about the credit card industry. Those companies were charged with charging you too much. Does this mean Congress might take on a new role policing plastic? Marketplace’s John Dimsdale is here to explain. Hey John.
JOHN DIMSDALE: Hello Tess.
VIGELAND: So this is certainly not the first time that we’ve seen the credit card industry put on the hot seat in front of Congress. What was on the table this time?
DIMSDALE: Well, you know, now that Democrats are in control, there seems to be more of a spotlight on this issue. At a hearing this week, the Senate Investigations’s subcommittee heard from one Chase card holder who was hit with $7,500 in interests in penalties on purchases of only $3,200
VIGELAND: Whoa! That just sounds like usury.
DIMSDALE: Yeah, over six years he paid Chase more than twice what he borrowed, and still owed more than $4,000 — until just a few days ago, when committee members contacted Chase. Which caused the company to wipe his bill clean, of course. And the head of the company even apologized to him at this week’s hearing.
VIGELAND: And you know, John, a lot of this seems to happen because people don’t understand what the rules are on their credit cards. And I mean, you can’t blame folks. They get that slip of paper in the credit card envelope, and who can read that?
DIMSDALE: That’s absolutely one of the biggest complaints. That the fees aren’t spelled out in plain English, or even English at all. The chairman of the Senate Committee this week, Michigan Democrat Carl Levin, got some laughs when he started reading from the fine print of a credit card statement.
CARL LEVIN: To calculate the daily balance for each day in this statement’s billing cycle, we take the beginning balance, add an amount equal to the applicable daily periodic rate, multiplied by the pervious day’s daily balance, add new transactions, new account fees, new transactions fees, subtract applicable payments and credits . . .
VIGELAND: . . . I think we know where he’s going. We’ve all certainly been in that situation. What can Congress do about this?
DIMSDALE: First of all, they’re hoping that by shining a spotlight on this, they’ll get some self-policing by the industry, maybe some voluntary cuts in the fees and charges. And if not, then they’ll impose some laws. Better disclosure requirements, some limits on the interest rates that banks can charge. This would let consumers comparison shop among the different cards.
VIGELAND: All right. Marketplace’s Washington bureau chief John Dimsdale. Thanks for your time, John.
DIMSDALE: Thanks Tess.
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