The Credit Card Accountability, Responsibility and Disclosure Act

Senator Christopher J. Dodd
Chairman, Senate Banking, Housing and Urban Affairs Committee
Senator Richard C. Shelby
Ranking Member, Senate Banking, Housing and Urban Affairs Committee
534 Dirksen Senate Office Building
Washington, DC 20510

Re: The Credit Card Accountability, Responsibility and Disclosure Act, S. 414

Dear Chairman Dodd and Ranking Member Shelby,

Public Citizen is a national non-profit organization that represents the interests of consumers and the public in matters before state legislatures, the courts, executive branch agencies, and Congress. We strongly support the Credit Card Accountability, Responsibility and Disclosure Act, S. 414, which ends some of the most unfair and abusive practices of the credit card industry.

Times are difficult for lenders, but they are tougher for consumers who are drowning in a sea of debt.  Americans are struggling to stay current on their mortgage payments and the unemployment rate was a staggering 8.1 percent in February, the highest rate in more than 25 years.  In this financial climate, consumers are relying increasingly on credit cards to make essential purchases.[1]   The percentage of credit card debt more than 60 days late was a record 4.04 percent in January, 30 percent above historical averages.[2]   Unpaid balances on credit cards are expected to reach $1.2 trillion by the end of 2012, or $6,373 per cardholder.[3]

For years the credit card industry has been allowed to run wild.  The last substantive credit card reform legislation was passed in 1987.  The Office of the Comptroller of Currency has an undistinguished record of credit card oversight and enforcement.  We have seen the effect of a lack of regulation and accountability on the accounting and mortgage industries.  A similar collapse in the credit card industry would be equally devastating.

Opponents of S. 414 argue that it would be best to allow the Federal Reserve regulations to go into effect.  The Fed’s rules were a good first step, but S. 414 offers more protection to consumers.   Unlike the Fed rules, S. 414 eliminates companies’ use of “any time, any reason” interest rate increases and account changes, including a full bans on the practice of “universal default” and retroactive rate increases, addresses “over-the-limit” fees and restricts the terms under which companies may issue credit cards to persons under the age of 21.  These essential reforms address some of the most unfair credit card company practices.

Unfortunately, the Fed rules will not take effect until July of 2010.   Americans need relief now.   Through no fault of their own, consumers’ interest rates are already being increased, limits being slashed, and fees piling up.   Credit card companies are raising their credit card rates to compensate for increased defaults and billions of dollars in losses from risky investments.[4]   Since January of last year, the Fed prime interest rate has steadily decreased, but banks have increased their credit card interest rates, minimum monthly payments, service charges, balance transfer fees, and fees for conducting transactions abroad.[5]

The United States government has repeatedly bailed out Wall Street in the past several months. It is time to come to the aid of Main Street.  We strongly urge the Committee to pass the Credit Card Accountability, Responsibility and Disclosure Act, S. 414.


David Arkush
Public Citizen's Congress Watch

[1] E.g., Kathy Chu, More Americans Using Credit Cards to Stay Afloat, USA Today, Feb. 29, 2008, at 1A.

[2] Salman, Credit Card Debt: The Next Big Meltdown?, iStockAnalyst, Mar. 11, 2009, at

[3] Elizabeth Hester & Ari Levy, Credit-Card Users Feel Pain as U.S. Banks Reap Gain, Bloomberg News (Dec. 18, 2008) at

[4] See Eric Dash, Consumers Feel the Next Crisis: It’s Credit Cards, NY Times, Oct. 28, 2008, at A1; see also Leslie McFadden, Credit Card APRs Rise Despite Fed Rate Cuts,, Mar. 4, 2008, at; see also David Lazarus, What Rate Cuts? Use of Plastic Gets Pricier, L.A. Times, Feb. 10, 2008, at; see also Kathy Chu, Facing Losses on Bad Loans, Banks Boost Credit Card Rates, USA Today, Apr. 27, 2008 at

[5] See Hester & Levy, supra; see also McFadden, supra.