Levin Statement on Federal Reserve Proposal to Improve Credit Card Disclosures

WASHINGTON – Sen. Carl Levin, D-Mich., Chairman of the Permanent Subcommittee on Investigations, today made the following statement regarding the Federal Reserve’s proposed regulation on credit card disclosure:

“Better disclosure is critical to helping consumers, but it is no substitute for outlawing abusive credit card practices that unfairly mire American families in debt. Congress needs to do more than require that unfair credit card practices be disclosed -- it needs to end them. That includes eliminating unfair and retroactive penalty interest rate hikes, forbidding interest charges on debt that is paid on time, requiring card issuers to apply consumer payments to the portion of their debt with the highest interest rates, prohibiting repeated over-the-limit fees for a single over-the-limit purchase, and eliminating the practice of charging consumers a fee to pay their bills. Legislation to end these and other unfair credit card practices has been introduced in the Senate and House. I will study the long-awaited Federal Reserve proposal to revamp the outdated credit card disclosure rules now on the books.”

In March 2007, Levin held hearings on some unfair practices used by the credit card industry that keep many American families in a downward spiral of debt. Following the hearings, Levin and Sen. Claire McCaskill, D-Mo., introduced the Stop Unfair Practices in Credit Cards Act (S. 1395) [PDF] in an effort to end the unfair practices exposed in that investigation. If passed, this law would stop credit card companies from charging interest on debt that is paid on time; it would crack down on abusive fees, including late fees, over-the-limit fees, and fees to pay a bill; it would prohibit the charging of interest on fees; it would cap penalty interest rate hikes at no more than seven percent; and it would require that increased interest rates apply only to future credit card debt, and not to debt already incurred.

For more information on the Stop Unfair Practices in Credit Cards Act, read the press release, the bill summary or the floor statement.