Rep. Tierney lauds legislation to protect credit cardholders

PEABODY – Last spring, U.S. Rep. John F. Tierney led a series of round table discussions with North Shore lenders and credit cardholders to raise awareness about unfair business practices that many credit card companies adopt.On Thursday, the Salem Democrat spoke on the floor of the House of Representatives in support of the Credit Cardholder’s Bill of Rights, House bill No. 627. The proposed legislation included measures that would protect consumers from what often amounts to trickery, due-date gimmicks, misleading terms, unfair sub-prime fees and arbitrary interest rates.The bill passed the House by a vote of 357 to 70.Among other provisions, the bill calls for an 18-percent cap on interest rates. Some credit cards charge 22-24 percent and those issued by large department stores have been known to impose even higher rates.According to Tierney, credit card debt in U.S. households grew nearly 20 percent in just four years -? from $800 billion in 2004 to a record $977 billion in the third quarter of 2008.The average American household’s debt from credit cards has risen from $2,966 in 1990 to $9,840 in 2007.Consumers nationwide are facing excessive credit card fees, sky-high interest rates, and unfair, incomprehensible agreements that credit-card companies revise at will, the congressman said.For example, in 2007, credit-card issuers imposed $18.1 billion in penalty fees on families carrying credit card balances ? up more than 50 percent since 2003 and accounting for nearly half of the $40.7 billion in industry profits. Last year’s estimates were that credit card companies would break all records for late fees, over-limit charges, and other penalties, and pull in more than $19 billion.Tierney said steps have been taken to restore America’s commitment to usury law and capping all interest rates.”A usury rate is needed now more than ever, as credit card companies continue to force Americans to dip into their savings while they buoy their own excessive profits,” said Tierney, lauding U.S. Reps. Barney Frank and Carolyn Maloney, who initiated the landmark consumer protection legislation. “Large Financial institutions like JPMorgan Chase, Bank of America and Citigroup have irresponsibly stopped credit background checks to limit risks, and substituted interest and fee increases to unjustly reward themselves while hurting families and small businesses ? the same taxpayers from whom they sought loans at low interest rates to cover their reprehensible conduct.”The Massachusetts Public Interest Research Group assisted the congressman’s office in orchestrating the community meetings, including those at Salem State College and North Shore Community College in Lynn.