Fifteen Eighty Four

Academic perspectives from Cambridge University Press


Credit Card Complaints

I have a few. I have had credit card companies fail at the most basic services. And I’m one of the lucky ones.

From a very heavily-commented editorial in today’s New York Times:

‘When the Federal Reserve asked for comments on its proposed rules on abusive credit card practices, an astonishing 56,000 poured in. Most were from outraged consumers. They told of interest rates skyrocketing when they paid an unrelated bill late. They complained of unwarranted late fees and pushed-up due dates. One Pennsylvania customer fumed: “I’m fed up with credit card company tricks that drive us deeper in debt.”’

The author cites Ronald Mann of Columbia Law School. Mann likens the fees, interest rates, and other schemes by credit card issuers to a “sweat box.” He’s author of Cambridge’s Charging Ahead: The Growth and Regulation of Payment Card Markets. He knows a thing or two about consumer spending and the habits of credit issuers.

I’ve asked him for some comments — I’ll be back with an update if he has a chance to respond!

Update #1: Here is a link to the comments lodged with the Federal Reserve Board by consumers. Thousands and thousands of them.

Update #2: Dr. Mann’s further comments are below. He doesn’t feel that Congress’ legislation will be too effective. Here’s why:

My general perspective here is that much of the legislation Congress is considering will do little or no good. For the most part, Congress is considering bills that outlaw specific contracting practices issuers use to make it difficult for cardholders to anticipate the charges. The problem with that approach is that issuers constantly “cycle” the contractual practices they use, and outlawing the practices that were current last year has little effect on “cutting-edge” issuers who are already designing new practices that would not be covered by the statute. My strong impression continues to be that the bills would have little or no chance of passing if they had any serious prospect of actually changing the way the industry does business.

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