U.S. Credit Card Issuers Promise Clear, Simple Language
In response to growing pressure from U.S. lawmakers, some credit card companies said on Wednesday they are trying to do a better job of explaining fees and charges to consumers.
"We believe it should be a priority to shorten and simplify disclosure language and to focus on the most relevant terms and conditions," Bruce Hammonds, president of Bank of America Credit Card Services
The panel, led by Michigan Democrat Carl Levin, is looking into industry practices he described as predatory in nature and confusing to consumers.
Levin held out the possibility of crafting legislation that would force credit card companies to end abusive practices and require regulators to improve disclosure rules.
"Our investigation found that even accounts in good standing are socked unfairly by little known ... practices that inflate interest charges for millions of consumers," Levin said.
Hammonds was one of three credit card executives who testified before Levin's panel.
Richard Srednicki, chief executive of the card services division at JPMorgan Chase's
Last week, Citigroup
"We eliminated the practice altogether for all customers during the term of their card," said Vikram Atal, CEO of Citi Cards.
Sen. Norm Coleman of Minnesota, the top Republican on the subcommittee, said Citigroup's recent move was encouraging. He also praised Chase for eliminating a practice known as double-cyle billing which includes tacking on fees, based on calculating fees based on two prior months.
Such practices are not illegal, but "do raise concerns," Coleman said.
Outstanding U.S. credit card debt amounted to between $750 billion and $800 billion in November 2006, according to estimates based on Federal Reserve figures. The industry has more than 640 million credit cards in circulation.