DailyViews: Editorial

Give credit where its due

This past week was unusual in that help is on the way for U.S. consumers on two fronts, albeit at far too slow a pace.

After the Federal Trade Commission said it hoped to have some rules figured out by the end of the year on how to keep motorists from being price gouged, the Federal Reserve said Friday it hopes to do the same thing for credit card holders — also by the end of the year.

Unfortunately, nothing moves fast these days except the gallon dial on the gas pump. Still, the Fed board’s approval of rules Friday is good-news-in-waiting for people who have opened up their credit card statements and wondered why their rates went up unexpectedly.

The Fed board approved the biggest clampdown on the credit-card industry in decades. A report by The Associated Press broke down some unfair and deceptive practices that would be prohibited by the new rules:

• Placing unfair time constraints on payments. A payment could not be deemed late unless the borrower is given a reasonable period of time, such as 21 days, to pay;
• Unfairly allocating payments among balances with different interest rates;
• Retroactively raising interest rates on preexisting balances;
• Placing too-high fees for exceeding the credit limit solely because of a hold placed on the account;
• Unfairly computing balances in a computing tactic known as double-cycle billing;
• Unfairly adding security deposits and fees for issuing credit or making credit available;
• Making deceptive offers of credit.

Not surprisingly, the finance industry takes a dim view toward all this meddling in its business, voicing up a predictable warning that any such changes would, for a variety of reasons, result in higher interest rates all around.

More likely, though, the industry’s reluctance to see reform occur — and there is an argument that even this reform isn’t enough — is based on pure dollars and cents. According to the Consumer Federation of America, consumers have a combined credit-card debt of about $850 billion. That quadruple what it was less than 20 years ago. And the federation says that the nearly 60 percent of card holders who don’t pay off their balance every month are carrying an average debt load of about $17,000. You can see why the industry doesn’t want anything to change. That’s a nice, lucrative field in which to graze, especially during troubling economic times.

It’s hard to see how requiring business to be conducted in a more fair and businesslike manner can be anything but beneficial to both the consumer and the credit lenders.

The Albany Herald Editorial Board

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THE ALBANY HERALD Founded by H.M. McIntosh, 1891 126 N. Washington St., P.O. Box 48, Albany, Ga. 31702 Michael J. Gebhart, Publisher Jim Hendricks, Editor Danny Carter, Managing Editor Michael Hill, Circulation Director Tami Abbott, Advertising Director Lynn Ridder, Operations Director Cheryl Frakes, Business Office Manager