Overview

Credit card companies use a variety of unfair practices to trap consumers in a cycle of over-priced debt. The companies are allowed by regulators to raise your rates for any reason, including no reason. They are allowed to operate nationally out of states like Delaware and South Dakota, where weak consumer laws provide no restrictions on interest rates or fees.

Even the federal regulators finally took notice, and recently ordered banks to increase minimum payments by a modest amount. In 2005, Congress passed punitive legislation long sought by the powerful credit card industry to make it harder and more expensive to file for bankruptcy, and to force consumers to pay off more credit card debt if they do so.

S 393, the Akaka Credit Card Minimum Payment Warning Act, would replace that industry-approved disclosure with a specific, customized warning.

Although the ability of states to regulate the fees and interest rates (APRs) of credit card companies has been severely restricted by federal preemption doctrine, which has allowed the weak laws of Delaware and South Dakota to override the state laws where credit card customers live, states are taking action in one area.

In response to the growing problem of aggressive credit card marketing to young people on college campuses, some states, such as California, have restricted campus credit card marketing. Several colleges and universities have taken similar actions at the local level. For more information, see the Florida. PIRG report, "Graduating Into Debt: Credit card marketing on college campuses."