Assemblyman Andrew Raia (R,C,I,WF-East Northport), ranking minority member of the Banks Committee, today participated in a Joint Public Hearing on the practices of the credit card industry. The hearing was held to examine the billing, marketing and disclosure practices of the credit card industry, and their impact on consumers. As the ranking minority member on the Banks Committee, Raia is responsible for reviewing and initiating legislation governing financial institutions operating in the state.
“Choosing the right credit card and understanding your rights as a credit card consumer are vital in maintaining a healthy credit history. Unfortunately, there are troubling facts such as outrageous late payment fees and interest rates. This is something we must address and I look forward to joining with my colleagues to produce legislative solutions that will address some of the most glaring flaws in the industry,” said Raia.
Raia noted that a September 2006 study by the United States Governmental Accountability Office found that late payment penalties are as high as $39 per occurrence and that some interest rates are over 30%. The study also found many questionable terms or conditions, including universal default clauses that allow issuers to raise a borrower’s interest rates based on indebtedness or late payment to other creditors.
According to the Federal Reserve Board, over 45% of American families carry a balance on at least one credit card from month to month with an average balance of $5,100. According to Experian, a major credit reporting agency, the average New York consumer holds more than four credit cards and over sixteen percent hold ten or more cards.
Raia added that he is currently reviewing and will likely support legislation that would prohibit credit card companies from increasing the rate of interest imposed on an outstanding balance based on a change in credit rating.
“This legislation would make it illegal for a company to increase rates for late payments to other companies. Currently, you can have your rates increased even if you have never made a late payment to that specific card issuer. We must take the necessary steps to prevent big corporations from trying to rip off consumers in efforts to increase profits,” said Raia.