WASHINGTON, March 31 –The Senate banking committee today narrowly approved and sent to the Senate legislation to ban abusive credit card practices.
Senator Bernie Sanders (I-Vt.) cosponsored the bill that cleared committee, but he said that when the legislation reaches the Senate floor he will press for a nationwide cap on credit card interest rates.
Sanders on March 12 introduced a measure to place a 15 percent ceiling on interest rates on credit cards and loans to consumers and businesses.
Banks that have received the largest taxpayer bailout in U.S. history, he said, should not be allowed to slap consumers with heavy fees on top of interest rates that have shot up to 30 percent or more.
“Every week I hear from Vermonters who are outraged at having to pay 25 or even 30 percent interest on their credit cards – especially at a time when their tax dollars are bailing out the large banks that issue those credit cards,” said Sanders. “Frankly, this is nothing less than loan sharking and it has got to end.” Sanders noted that banks which charge consumers 25 percent or more are only paying the Fed a benchmark interest rate of 0.25 percent or less.
There was no interest cap in the measure that the Banking, Housing and Urban Affairs Committee approved 12 to 11. That measure, by Senator Christopher Dodd (D-Conn.), the committee chairman, would bar credit card companies from raising interest rates at any time for any reason. Sanders for years has been trying to outlaw that practice which he dubbed “the bait and switch interest rate.” Sanders was the first member of Congress to introduce legislation to outlaw this scam when he served on the House banking committee.
The bill also would outlaw “double-cycle billing,” the practice of computing interest charges on outstanding balances from more than one billing cycle. It also would prohibit banks from jacking up interest rates for consumers who pay on time but have a flawed credit record with another lender.
Credit card statements would have to be mailed at least 21 days before a bill is due. That is one week more notice than is required now. The legislation also would prevent credit card issuers from changing the terms of a credit card contract as long as the holder remains current on payments.