March 13, 2007

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  NEWS: Credit Cards Promise Reform

  The Senate Permanent Subcommittee on Investigations has held meetings this week with representatives from several major names in credit card issuing, on the topic of confusing language in disclosures and predatory fees and rates. Many issuers are vowing now to make a move towards consumerism and deal with these items directly – but at least one senator sitting on the panel thinks legislation is needed to compel those holdouts to stop those habits that have become notorious throughout the industry.
  
  First of all, the issue of clarity in card rules and regulations was discussed. As anyone who has looked at such a document lately can attest, the essential terms and conditions of the credit card in question are almost always bogged down in jargon and muddled language – oftentimes, because card issuers have sneakily slipped a hidden charge or clause into the semantics. Both Bank of America and Chase Bank make proactive commitments to "shorten and simplify" the language in their card disclosures, both citing good customer service as the prompts. Sen. Carl Levin, however, thinks that promises from a few big hitters are not enough – as chairman of the investigatory committee, he wants legislation written that would make such changes mandatory across the board.
  
  Also on the table was the question of unfair fees and rate hikes – most notably, the most-reviled (by consumers, anyway) issue of universal default. In a nutshell, universal default is the condition in which card companies sock a consumer with a higher interest rate because they were late/delinquent on another, unrelated bill. Citigroup, which formerly exercised universal default, has said that it will do so no longer.
  
  The Subcommittee is working with the Federal Reserve to lay down legislation on the disclosure issue, under a revision of Regulation Z.
  
  
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