The report released recently by the Government Accountability Office, Congress' investigative arm, describes the fees, interest rates and disclosure practices of 28 popular credit cards. It found that late fees averaged $34, up from $13 in 1995, while some credit card issuers impose penalty interest rates of more than 30 percent on consumers who pay late or exceed the credit limit.
"Millions of Americans depend on credit cards to pay their bills and buy essentials like groceries or gas. Unfair or confusing credit card practices take advantage of working families," said Sen. Carl Levin (news, bio, voting record) of Michigan, the senior Democrat on the Senate's investigative subcommittee, who had asked the GAO to conduct the study. "This report shines a needed spotlight on excessive credit card fees, unfair interest rates and inadequate disclosure practices that ought to be stopped."
Credit cards have become a ubiquitous and indispensable part of the culture, with an estimated 690 million cards in Americans' wallets and more than $1.8 trillion charged on them in 2005. Consumer groups have frequently criticized credit card fees as excessive. The banking industry maintains that the costs of using a card can vary according to the risk posed by the account holder.
The new report shows "how pricing has changed with competition," Edward Yingling, president and chief executive of the American Bankers Association, said Wednesday. "The pricing has gotten more nuanced."
