Congress looks at Credit Card charges - finally!!

For years now the small print and credit card charges have risen enough to keep people in debt forever. Today the Senate brought the major Banks into a hearing to discuss what is confusing billing practices.

From the AP:

Panel slams banks over credit practices
By MARCY GORDON, AP Business Writer

An Ohio man whose $3,200 credit card debt mushroomed to $10,700 with interest and fees told his story Wednesday to senators who denounced the industry for confusing billing practices and shifting interest rates.

Executives of three major banks defended their credit card practices as responsible and responsive to consumers' needs in testimony at the hearing of the Senate Homeland Security and Governmental Affairs' investigative subcommittee. Those from Citigroup Inc. and Chase Bank USA said their companies were eliminating some practices — including the one that hit Wesley Wannemacher of Lima, Ohio, with over-limit fees on his Chase card account 47 times although he went over his credit limit only three times.

The interest charges and fees on Wannemacher's account more than tripled his debt despite his having made payments averaging $1,000 a year over six years, noted Sen. Carl Levin (news, bio, voting record), D-Mich., the subcommittee's chairman.

"Unfair? Clearly, I think," Levin said. He said an investigation by the panel found that "sky-high interest charges and fees are not uncommon in the credit card industry. While the Wannemacher account happened to be at Chase, penalty interest rates and fees are also employed by Bank of America, Citigroup and other major credit card issuers."

Richard Srednicki, the chief executive officer of Chase Card Services, apologized to Wannemacher in his testimony. "In this case, we simply blew it," he said.

Srednicki said the company has decided it no longer will charge over-the-credit-limit fees to customers who have been in a chronic over-limit position for 90 days.

Wannemacher used a new Chase card in 2001 and 2002 to pay for expenses mostly related to his wedding. He had $3,200 in purchases, interest charges of $4,900, 47 over-limit charges totaling $1,500, late fees of $1,100, for total charges of $10,700 as of February. He paid $6,300, leaving a $4,400 balance — which Chase agreed to waive after he contacted the subcommittee staff.

"Debt seems to invoke a feeling of hopelessness unlike any other problem I've encountered," Wannemacher testified at the hearing. "When a debtor calls you on the phone and you make a minimum payment, you know that you've made no real progress and that in a month, they will be calling again."

It's about time.

When I was growing up I'd hear about people borrowing money from the "Mob" and what they paid back included "Juice". The "juice" was the interest on the loan and if you didn't pay, you ended up with a broken body part. Of course they didn't kill you cause they wanted their money back. These Bank Credit Cards are as bad as the "Mob". The only difference is they don't break arms or legs. But, they do ruin your credit and it is hard to correct this. Plus the secret charges on the card could double what you owe. What the "Mob" did was illegal. What these Banks are doing has been to this point. They have been flying under the radar for years with their charges, finding new ways to make money and fleece the borrower.

It's time we have some laws on the books that protect the borrower. Lately the corporate greed has touched everyone in some way. And they wonder why people aren't saving money!

On a personal note: I have a Chase Savings Account that pays interest. Not much interest, maybe .05% a year. Believe it or not, I am charged $4.00 a month to save my money. That's the bank service charge for savings account under $2,000. They are charging me to hold and use my money and what they pay me to use my money doesn't cover the service charge. Now someone would say "move your money!" If I do that and maybe, someday, overdraw, the charges for that are even more. So the average person is screwed!

If you have any nightmare bank stories, leave them in the comments. I'll post the best ones.