Consumer Affairs reports on three credit-card industry bigwigs testifying before a senate subcommittee 2 days ago. (LINK)
This is the kind of treatment the creditors deserve; this is what should have happened right after bankruptcy reform was passed. Thing is, while there is some evil ingrained in the business of credit card lending, not all the creditors are evil. It would have been nice to include executives from some of the consumer-friendly creditors, like BB&T or Target, because they might have given the subcommittee some straight answers.
Anyway, the good news is Chase has announced they will stop using two-cycle billing, and as we've discussed earlier, Citi is abandoning universal default.
Normally, I'd say that the creditors set up a voluntary relationship with their debtors, and it really isn't the business of Congress how a credit card company conducts its billing. But as this hearing established, credit card agreements are written at the 27th grade level (how they determined that I don't know...). If creditors obfuscate the terms of an agreement with their customer, then it's no longer a two-way voluntary transaction; it's more like fraud.
There's a lot of talk about billing cycles in the linked article; the truth is, those creditors can use whatever computation methods they want, so long as their customers agree to them. The problem is, it's unlikely they clearly explained those terms to any of their borrowers. I can tell people to get educated and read the fine print, but the way credit card agreements are currently written (and revised at will) no one can be expected to really understand the terms.
My larger problem is the way creditors reserve the right to raise your interest rate and fees "at any time, for any reason." A clause like this makes everything else in the credit card agreement meaningless. Don't do business with people who treat you like that.
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