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New York Times editorial...   >>>

New York Times editorial

Published: October 22, 2009



Congress blundered badly when it gave the credit card industry as long as 15 months to phase out the deceptive and predatory practices that were outlawed in a new law enacted in May.



Instead of backing away from exploitation, credit card companies have intensified it. For starters, they have driven up already outrageous interest rates by an industrywide average of about 20 percent, according to a report scheduled to be released next week from the Pew Charitable Trusts’ Safe Credit Cards Project. The companies also have used sleight of hand to more than double rates on customers who spent prudently and paid their bills on time.



The Credit Card Accountability, Responsibility and Disclosure Act would end a great many odious practices. The companies, for example, could no longer deluge broke and unemployed teenagers with credit cards, driving them deeply into debt that they have no way of paying off. Credit card companies will have to verify the young person’s ability to pay or get a signature from a responsible adult before credit is issued.



The law prohibits arbitrary rate increases, penalties for customers who are late paying an unrelated bill — known as universal default — and the all-too-common scams in which companies charge cardholders new interest on debts that they have paid a month or two earlier and rig due dates so that payments are late by definition and subject to a hefty penalty.



The Federal Reserve chairman, Ben Bernanke, acknowledged recently that moving up the effective date to Dec. 1 would allow consumers to get benefits and protections sooner. But he also expressed misgivings that the move might be difficult for companies that need to create new billing and accounting systems, along with other changes.



Mr. Bernanke’s opinion will hold less sway in the House than in the Senate, where lawmakers are notoriously deferential to regulators and to the banks and credit card companies whose biddings those regulators so often do. But pressure for action in this matter is clearly building in the House and among the voters, who have grown weary of being gouged, especially at a time when many of them are having trouble feeding and housing their families.



In any case, it is time that Congress looked out less for the credit card companies and more for American consumers. That means passing bills in Congress that would move up the effective date of the credit card law.