Credit Card Practices: Fees, Interest Rates, and Grace Periods

The Permanent Subcommittee on Investigations held a hearing entitled, “Credit Card Practices: Fees, Interest Rates, and Grace Periods.” It was the first of several Subcommittee hearings that  examined a variety of credit card practices that raise concerns. This hearing focused on how credit card issuers apply interest rates and fees to consumer accounts.  The hearing examined, for example, how credit card issuers select and apply interest rates and, for consumers carrying a balance forward, eliminate grace periods for repaid debts. It also analyzed high fees charged for late payments, over-the-limit charges, and other matters, including how those fees are assessed, how they add to interest costs, and how they contribute to consumer debt. In addition, the hearing  examined an industry practice requiring consumer payments to be applied first to balances with the lowest interest rates instead of to balances with the highest interest rates. The hearing drew, in part, from a September 2006 GAO report detailing the finance charges, fees, and disclosure practices associated with 28 popular credit cards.