In the midst of all the reports of home foreclosures and credit failures in 2007, an investigation that could affect anyone who has a credit card slipped under the radar.
Spearheaded by Michigan Senator Carl Levin, the U.S. Senate Permanent Subcommittee on Investigations Hearing: “Credit Card Practices: Unfair Interest Rate Increases” met twice this past year, in March and December. While the senator doesn’t have another hearing scheduled soon, the investigation isn’t over, an office aide in Washington told me Thursday.
What this is about is what Levin describes as arbitrary decisions by credit card companies to increase the rates on consumers’ cards, on what often seems like an inexplicable whim. The problem is, you agree to this whim when you get your credit card (read the fine print in your cardholder information packet).
Citing a litany of personal examples where credit card issuers like Chase, Discover and Capital One and others raised consumers’ rates for almost no reason at all, Levin announced that he was taking on the industry and its rate-raising-for-no-real-reason practice.
One woman said she’d never been informed her rate had gone up, Levin said. More than one person said that, even though they’d never been late on their payments, their FICO score had gone down. Why FICO scores go down is another whole issue — often, they go down if you simply apply for credit somewhere. They also go down if you get too close to maxing-out your card.
But for whatever reason their score dropped, the credit card companies deemed that was a good excuse for doubling or even tripling someone’s interest rates.
Read full story [KPC Media Group]
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