[Congressional Record (Bound Edition), Volume 155 (2009), Part 10]
[Senate]
[Pages 12664-12665]
[From the U.S. Government Publishing Office, www.gpo.gov]




     CREDIT CARD ACCOUNTABILITY, RESPONSIBILITY AND DISCLOSURE ACT

  Ms. KLOBUCHAR. Mr. President, I am here to speak out in support of 
the Credit Card Accountability, Responsibility and Disclosure Act.
  I am proud to be a cosponsor of this bipartisan legislation, which 
will help to end the abusive practices of the credit card industry that 
are hurting so many hard-working middle-class families. I thank Senator 
Dodd and Senator Shelby for their efforts to come together on a bill 
that protects consumers and brings so much needed relief to Main Street 
families. It has been a long time in coming. I wish we had been able to 
pass this a few weeks ago, but I am hopeful we will be able to get it 
done this week.
  As families are sitting around the kitchen table looking at their 
budgets, they have a lot of expenses to deal with--the basics such as 
food, electricity, the rising cost of college and health care, and 
growing credit card bills.
  Seventy-eight percent of households in this country have at least one 
credit card. At the end of last year, Americans' credit card debt was 
more than $972 billion. The average household debt is more than $8,300. 
This does basically track--when you look back over the last 8 to 10 
years--where wages have gone down and expenses have gone up. I know 
that before we entered this economic crisis, it was about $6,000 that 
the average middle-class family was behind. Now you see $8,300--their 
credit cards. But it is not just debt that families are paying off. In 
2006, two-thirds of the credit card companies' profits came from 
interest payments.
  So millions of families are dealing with huge amounts of credit card 
debt at the same time they are dealing with the many other challenges 
that are a result of this economic downturn. Their hours have been 
reduced or one of them may have lost a job or they may have difficulty 
sending their kids to college.
  This isn't just an economic issue, it is also an issue of fairness 
and common sense. I believe Americans have the obligation and duty to 
pay the debts they owe. But too many credit card companies are using 
deceptive practices and fine print to take advantage of hard-working 
American families. The credit card companies are using tiny words on 
the back of the bills, and they are doing this to pad their own 
profits.
  Many companies hide the terms of the agreement behind fine print and 
confusing language. They apply payments to the low-rate balances before 
high-rate balances and, worst of all, they raise interest rates without 
proper notice.
  According to the Consumers Union, a study of the 12 largest credit 
card issuers found that 93 percent of credit cards allowed the issuer 
to raise the interest rate ``at any time'' by changing the agreement; 
93 percent of credit cards allow the issuer--the credit card company--
to raise the interest rate at any time by simply changing the 
agreement.
  This isn't right. Credit card companies should not be making a profit 
by pulling the rug out from under American consumers.
  When I think about this issue, I don't just think about that 93 
percent figure, I think about people in my State who have played by the 
rules and used credit cards responsibly and made timely payments and 
have good credit ratings--only to turn around and have the rules 
changed.
  I heard from one man in Mahtomedi, MN, who had a credit rating of 
800. He had never made a late payment, had never been delinquent on his 
account in any way. He got word in April that his fixed rate of 5.9 
percent was going up to 10.9 percent in May and would thereafter be a 
variable rate; that is, what used to be a fixed rate at 5.9 percent 
will be changing constantly. He will have no control.
  He called the credit card company to complain and, do you know what. 
The credit card company told him he ought to be happy because his was 
one of the lower rate increases. They told him he should not take it 
personally.
  It is awfully hard not to take these rate increases personally when 
you have not done anything to justify having your rate increased, when 
you are going to have a tough time making ends meet anyway because of 
the tough economy, and because you have to pay so much more to keep a 
card you have had for years and years.
  I also heard from a woman in St. Joseph, MN. She had her credit card 
for 12 years. She had never been late on a payment and has her credit 
card bill automatically paid from her checking account every month. She 
recently contacted her credit card company because she noticed her 
interest rate had suddenly gone up a lot in 1 month. She had received 
no advance notice from her bank about the interest rate increase.
  But her problems didn't stop there. The problem was that the credit 
card company applied the new interest rate to her existing balance, and 
with the new interest rate factored in, her balance suddenly exceeded 
her available credit.
  Do you know what? She got hit with another interest rate increase. 
This woman, who had been a great customer for 12 years, saw her 
interest rate go up from 8 percent, to 19.3 percent, to 27 percent--all 
in a matter of 16 days--and through absolutely no fault of her own. She 
started at 8 percent and she had the money deducted from her checking 
account every month and she had not had any problems with late 
payments. She starts at 8 percent, goes up to 19.3 percent, and she 
ends up at 27 percent--all in a matter of 16 days, through no fault of 
her own. They raised the interest rate without telling her, applied it 
to her existing account balance and, suddenly, she was stuck with a 
problem she didn't even create.
  In the letter she wrote to me, she asked some valid and heartbreaking 
questions:

       How is something like this legal? How can the credit card 
     companies make it even harder in such hard times?

  These are questions a lot of hard-working Minnesotans and other 
Americans are asking today, and they deserve answers.
  We want Americans to pay their debt, and we want our businesses to 
succeed, but consumers deserve a level playing field, they deserve some 
rules of the road, and they deserve an end to the abuses and deceptive 
practices by the credit card industry.
  The credit card bill that is on the floor is going to do that. The 
bill will put commonsense rules into place to ensure fairness for 
consumers.
  First, the bill protects people from arbitrary interest rate 
increases, such as we saw with the man from Mahtomedi, MN, and the 
woman from St. Joseph, MN. It establishes fair rules and makes sense 
for how and when companies can raise interest rates. Additionally, the 
bill prohibits credit card companies from increasing rates on a 
cardholder for the first year when that account is open.
  Second, the bill requires credit card companies to give people 45 
days' notice of interest rate, fee, and finance

[[Page 12665]]

charge increases. This will ensure that people such as the woman from 
St. Joseph, MN, who wrote me, would not see any surprises on their 
credit card statements anymore. They will get a notice.
  Third, the bill prevents credit card companies from charging abusive 
fees. For example, credit card companies would not be able to charge 
you a fee for the ``privilege'' of paying down your credit card.
  Fourth, the bill requires more transparency from credit card 
companies. Credit card bills will be mailed 3 weeks before they are due 
to give consumers plenty of advance warning. Credit card companies will 
have to disclose any changes to the terms of a credit card agreement 
when people renew their cards. They will have to be upfront about the 
length of time and the total interest it will take to pay off the card 
balance if people only make minimum monthly payments. I think that 
would be helpful for many people I know, if they knew exactly how long 
it would take--if they just pay the minimum amount--and how much extra 
they would be paying. They will have to post their credit card 
agreements on the Internet so people can look at them anytime and 
compare them.
  Fifth, the bill strengthens oversight of the credit card industry so 
we can hold companies accountable for their behavior.
  This legislation will give consumers much-needed protections from bad 
practices that have been going on for too long. It is the beginning of 
leveling the playing field.
  If we are going to get our economy moving, we need to restore trust 
in our financial systems, and when it comes to the credit card 
industry, that means protecting consumers from unfair practices and 
putting into place commonsense rules that will bring much-needed 
transparency and accountability.
  We will be voting on this bill shortly. When I cast my vote, I will 
be voting for all the people in my State who are working hard and 
playing by the rules and just want the credit card companies to do the 
same.
  We cannot forget that the ultimate goal of reviving our economy is to 
make it possible for people in this country--who have worked hard, done 
everything right, paid their bills, and gotten these credit card 
bills--to get ahead. This bipartisan legislation, which I cosponsored, 
will end the unfair practices that have been going on too long for Main 
Street families, so they can keep more of their hard-earned money.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll. The legislative 
clerk proceeded to call the roll.
  Mr. DURBIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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