As the U.S. Senate begins consideration of credit card reform legislation, Senator Bernie Sanders on Monday brought together some of the more than 1,000 people who wrote to him to complain about high interest rates, hidden fees and other abuses. Sanders has called for a national usury rate, and has proposed legislation that would set the maximum charge at 15 percent, the same cap Congress has placed on credit union interest rates. At the press conference, Deborah Shelby of Jericho told reporters the interest rate on her credit card jumped from 13 percent to 29 percent. She called it "highway robbery" and said she has stopped using the card. James Sheldon-Dean of Charlotte said Bank of America raised his rate and lowered the available credit on an account he opened in 1974. "We always pay on time and always pay more than the minimum balances," he said. "I have to wonder about the business sense of a company that thinks it's a good idea to so systematically abuse its best customers."
Tamara Smith of Burlington thought she had a "fixed for life" interest rate, but Bank of American in early April jacked up her interest to 12.9 percent. Holly Smith of Essex Junction said she signed up five years ago for a card at a low, fixed rate, but she said in April the rate was doubled to 8.9 percent. "I know it's not 30 percent, but in my position, being on disability, it's practically the same thing."
Sanders said the outcry from Vermonters and people across the country was fueled by another factor. "What people were doubly disturbed about is that these banks who are charging these outrageously high interest rates are precisely the financial institutions that are receiving hundreds of billions of dollars in bailout money from the taxpayers of this country," Sanders told the press conference in his Vermont Senate office.
The measure coming before the Senate would:
- Protect consumers by establishing fair and sensible rules for how and when credit card companies can raise interest rates. Card companies must give 45 days' notice before increasing rates, and can no longer do so on existing balances.
- Crack down on abusive fees. For example, consumers no longer will have to pay a fee just to pay a bill. And credit card companies must mail statements 21 days before the bill is due, so cardholders can avoid hefty late fees.
- Protect consumers by making credit card statements understandable and protects college students from predatory marketers.
- Strengthens oversight of the credit card industry to keep it in line.