Consumers And Credit Card Practices Finally Get A Fair Hearing In New Congress

One major sea change in the new Democratic Congress is that consumers can finally get a fair hearing compared to the last 12 years of Republican rule since the 1994 "Newt Gingrich revolution". As late as 2005 the big credit card companies helped to write that year's "bankruptcy reform" bill. This past week, the same big credit companies were put under the microscope of the Senate's Banking Committee, chaired by ranking Democrat, Christopher Dodd(D-CT).

Testimony indicated that while credit companies earned about $79 billion in interest in the last calendar year, nearly $17 billion of this total was unfair and excessive late fees to consumers. In fact, the credit card companies really earn nothing from those who pay off their credit card bills in less than 30 days, really constituting little more than a short term interest-free loan for these persons and clearly acting as an encouragement for credit card companies to encourage persons who cannot pay debts off in 30 days or less, or who are likely to pay off late, but not default to be recruited by the credit card companies. In other words, persons with some risk, but not to the level of bankruptcy, are the best financial payoffs for the credit card industry.

The question for the Senate Banking Committee will be how to best protect consumers from unfair late fees and also to prevent consumers from allowing themselves to fall into credit card debt holes. But credit card companies will not want to give up their vast incomes that thrive on wall to wall TV ads that ask the question, "What's in your wallet?'. Chances are that many users of this and other credit card services may have a nearly empty wallet, but a mailbox full of monthly credit card bills to pay, and trapped in years of debt at steep interest rates.