May 19, 2009 7:28 pm US/Eastern
Consumer Report: Credit Card Bill Of Rights
NEW YORK (CBS) ―
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Jeff J. Mitchell/Getty Images
Credit card customers have been bailing on their bills in record amounts, up 72 percent in a year. Squeezed by the perfect storm of job losses and relentless rate hikes, nine percent of card holders have just stopped paying.
"The wild west, that is really what we're seeing, it's literally a reign of terror," Adam Levin said.
Levin founded credit.com to help consumers understand credit and use it wisely.
"The most abusive practice is any time, any rate, any reason and I've never heard of a contract where the other party can do whatever they want to do whenever they want to do it," he said.
The US Senate voted 90-5 Monday to give Americans a Credit Card Bill of Rights.
It includes:
- 45 days' notice before raising interest rates
- No rate increases on existing balances, unless the card owner is 60 days late paying.
- Rate increases drop once payments are made on time for six months
- Payments must pay down higher interest rate balances first
Card holders said it can't some soon enough.
"I think it's really like a scam. It shouldn't be in the fine print. Let us know," said Carrie Xu, Murray Hill resident.
"Most importantly, if you have a balance and they said it was at 7 percent, they can't raise it to 23 percent for no reason," Senator Charles Schumer said.
Credit card companies are fighting back. An industry group said they'll be forced to raise interest rates, annual fees and diminish rewards like frequent flier miles.
"The bottom line is the credit card companies are making record record profits. Credit cards will still be profitable but there will be more competition, more limitation, and it will be fairer to consumers," Schumer said.
Those affected the most will be consumers with low incomes or bad credit scores. Experts said they'll see higher interest rates or no credit available at all.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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