[Congressional Record (Bound Edition), Volume 155 (2009), Part 8]
[Senate]
[Pages 10660-10661]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       CREDIT CARD INTEREST RATES

  Mr. SANDERS. Mr. President, I wish to take just a very few moments to 
speak about an issue I think is resonating and causing great concern 
all over our country; that is, the outrageous escalation in credit card 
interest rates.
  I note that the House and the Senate will soon be addressing the 
issue of credit cards, but I hope very much that both bodies will 
include within their legislation something that is long overdue; that 
is, a cap on interest rates. We need a national usury rate law. It is 
totally unacceptable to me--and I think the vast majority of the people 
in our country--that credit card companies are charging people 25, 30, 
and 35 percent rates of interest on their credit cards. This is usury. 
This is wrong. From a biblical perspective, this is immoral, and it is 
time we got a handle on it.
  The truth is that a number of years ago, many States had usury laws 
which prohibited very high interest rates. As a result of a Supreme 
Court decision, those State laws were essentially made null and void 
and companies that moved to States such as South Dakota and Delaware 
could essentially charge

[[Page 10661]]

the American people any rate they wanted. Within the last 20 years, we 
have seen a huge increase in interest rates. About one-third of the 
American people are paying 20 percent or more. It is time we got a 
handle on that issue.
  What I would like to do this afternoon, very briefly, is read some of 
the e-mails that are coming to my office from the State of Vermont but, 
in fact, from all over this country. On late Friday afternoon, I sent 
out an e-mail to our e-mail list, and within 2 days' time we have had 
900 responses from people who have expressed to me what is going on in 
terms of their relationship with their credit card companies. The 
stories I am hearing are absolutely appalling--in some cases, 
unbelievable. What is particularly disturbing is that at a time when 
the taxpayers of this country have provided hundreds of billions of 
dollars to bail out failing financial institutions--which, because of 
their greed, their recklessness, and their illegal behavior, caused 
them to collapse--these same financial institutions are now saying to 
the taxpayers who bailed them out: Thank you very much; now we are 
going to raise your interest rates substantially.
  So what I will be doing in the coming weeks is coming here to the 
floor and reading stories from Vermont and from all over this country. 
Let me start off with one that comes from Poultney, VT. This is what 
the gentleman says:

       I owned and operated a summer business in excess of 43 
     years. My business credit card was with Avanta at 7.9 percent 
     for years. Last year, my payment jumped about $400 per month. 
     I thought there was fraud involved. Upon checking, I found my 
     interest had been raised from 7.9 to 28.8 percent. I always 
     paid more than the minimum and always on time. When Avanta 
     was contacted and asked why, I was told it's a floating 
     interest. I asked to speak to a manager and was advised 
     that's the way it was and they could do nothing to lower it. 
     I got a line of credit loan from Heritage credit union at 1 
     percent over prime, paid them off, and shut down my business. 
     After 43 years of business, it took usury to shut me down.

  That is just one story.
  Somebody writes from Virginia--the State of our Presiding Officer--
and says:

       Explain to me, do the banks/credit card companies feel that 
     the only way to make money is to cheat us or manipulate us 
     into taking part in an endless Ponzi scheme? How much profit 
     is to be expected in an honest deal? Even 15 percent seems 
     high to me.

  This goes on, Mr. President. We have one from Barre, VT:

       I only have one thing on my credit card every month. It is 
     the Internet access charge of $10.95. My credit card is a 
     Visa from Capital One. I received a letter stating that the 
     rates were almost double what I agreed to pay if a payment 
     was late, but it also stated if I did not agree to their 
     term, they would cancel my credit card. Let's not only do 
     something about credit card fees, let's stop banks in their 
     tracks with all fees they access on customer accounts they 
     have.

  From Castle Rock, CO, another individual writes:

       I have excellent credit. Nearly 780 last time I checked. I 
     had a ``fixed'' interest rate with Capital One at 4.9 percent 
     since 2002. In 2007 the rate was raised to 7.9 percent. I 
     received a letter in early April of this year that it will 
     rise to 17.5 percent for no particular reason, except that it 
     was a company decision. I am outraged! This is really unfair 
     for everyone but I think especially unfair for those who 
     really pay attention to maintaining good credit.

  That person had a 780 credit number, which is very good.
  Here is one from Bennington, VT:

       I'd been on time every month and one day I got my statement 
     and wow my interest rate had more than doubled. I called and 
     they did put it back to the rate I had and said it would be 
     good for only 9 months and then they would up it again and I 
     would have to call again. This is hard for the families who 
     aren't using their credit cards anymore and they are on a 
     budget and factor in the credit card payment, and then all of 
     a sudden one month it's gone up a lot and you didn't factor 
     that in.

  Wilder, VT:

       I am tired of being the one who has to pay! The executives 
     of these credit card companies mess up and the little people 
     pay. The government messes up and the little people pay. Now 
     my oldest child is going off to college and I can't even get 
     financial help except for loans. Yes, more interest. So now I 
     have to pay more interest on my credit cards. When will I get 
     help? I pay my bills, I pay my taxes. If I pay late I get a 
     finance charge and it hurts my credit rating. When these big 
     companies fall behind, they get my tax money, and I get to 
     pay it back for them.

  This is from Bridport, VT:

       On my Bank of America cards I made purchases at 9.9 percent 
     which was not a variable rate. I assumed I had that interest 
     rate because I have never had a late payment and have never 
     made just the minimum payment. This month I received notice 
     that my interest rate is going to jump to 15.65 percent and 
     be a variable rate. I do have steady income and I don't want 
     to damage my credit rating by paying the balance off in a few 
     months then cancel the card.

  Here is another, from West Burke, VT:

       My husband sustained severe brain trauma in 2000. We 
     managed to not file bankruptcy and to pay off all credit 
     cards. I now find that we were idiots to do this. Our credit 
     is ruined by going a year without income. Ruined, because we 
     paid any credit card debt we owed.

  Here is one from Little Rock, AR:

       I am 67 years old and had the card since the year of the 
     flood. I was on vacation and out of the country and did not 
     make my card payment on time. I had always kept my account 
     up. When I went to charge a flight on line it was denied. I 
     called them and they replied that since I was a ``late 
     payer'' I had to pay off my account every 30 days as it used 
     to before they allowed extended payments for large purchases. 
     I paid off the card that day and cut up the card.

  From West Newberry, VT:

       I send my payment by mail and sometimes the postal service 
     is slow and the card company got payment one day late and has 
     changed my interest rates from 16 percent to 29.9 percent, 
     and now if I pay the minimal payment the charges are more 
     than what I paid on the bill.

  One day late, and their rate went from 16 percent to 29 percent.
  As I mentioned, in 2 days we have gotten about 900 e-mails, 
significantly from Vermont but from all over the country. So I have 
introduced legislation which would cap interest rates on credit cards 
at 15 percent, with some exceptions going up to 18 percent. That 
legislation is cosponsored by Senators Durbin, Leahy, Whitehouse, 
Harkin, and Levin. The legislation is based on longstanding law which 
regulates credit unions, which under normal circumstances cannot charge 
more than 15 percent.
  The American people are hurting. We are in a recession because of the 
greed of a small number of banks on Wall Street, and now these very 
same banks are hitting the middle class and working families of this 
country with outrageously high interest rates. Enough is enough. We 
need to establish a national usury rate, so I ask my colleagues to 
support this legislation.
  Mr. President, with that, I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.

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