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Hirono looks to halt abusive credit card practices

Congresswoman Mazie Hirono has issued the following statement:


Have you looked at your latest credit card statement? Have you noticed a sharp increase in your interest rate or been hit by unreasonable fees?

Unfair and deceptive practices by credit card companies remain widespread in the market and continue to plague struggling consumers. I have received numerous complaints from constituents who are being hurt by these practices.

One constituent reported that she works three jobs, pays her credit card bills on time every month, and maintains her credit card balance well below the limit only to see her credit card interest rates go up into the double digits in the past two months.

Another stated that his credit card company hiked up his minimum monthly payments and arbitrarily increased his interest rate from 4 percent to 30 percent.

Unfortunately, such practices have become standard operating procedure for many credit card issuers, making stories like these more and more commonplace.

This past May, Congress passed the Credit Cardholders’ Bill of Rights Act, which was enacted to prohibit unfair practices such as raising rates retroactively on existing balances and charging interest on balances from more than one billing cycle.

The legislation also mandates that payments beyond the minimum go to debts with the highest interest rate, among other requirements.

Soon after this law was enacted, however, some credit card issuers rushed to raise minimum payments and pull back credit offerings in anticipation of the law’s implementation.

Research from the Pew Charitable Trust found that interest rates have risen by an average of 20 percent on credit cards from the largest twelve bank issuers, a group that controls over 90 percent of all credit card debt in America.

Instead of preparing for upcoming changes in the law, these credit card companies are finding ways to circumvent it by increasing rates and lowering limits.

This hurts financially strapped families in Hawaii who are trying to make ends meet in this difficult economy.

For this reason, the House will take up H.R. 3639, the Expedited CARD Reform for Consumers Act, later this week. I am an original cosponsor of the bill, which moves up the effective date of all provisions of the new credit card law from February and August 2010 to Dec. 1, 2009.

Credit card companies and depository institutions with less than two million cards in circulation would be exempt from this acceleration. H.R. 3639 targets the major credit card issuers that have arbitrarily increased interest rates, spiked fees, and hiked minimum payments.

Along with 44 of my colleagues in the House, I also sent a letter to Bank of America and Citigroup last week expressing concern about their new policies.

It has been reported that Bank of America will start charging customers an annual fee for not carrying a credit card balance and that Citigroup is already charging consumers who maintain balances below $2,400.

In the letter, we urged these two institutions to immediately reconsider their decision to institute new credit card fees on customers in good standing.

In addition, I signed on as an original cosponsor of legislation (H.R. 3977, the Credit Card Fee Limitation and Accountability Act) that would prohibit credit card companies from imposing fees for non-use of their cards or for failing to carry a minimum balance.

Consumers should be not be penalized for being fiscally responsible.

I appreciate hearing from all of you who have contacted me to share your stories. I will continue to work to ensure that your rights as consumers are protected.


Mazie K. Hirono

Member of Congress

2nd District of Hawaii

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