Declaring that anyone with a pulse and a Social Security number can get a credit card, Sen. Robert Menendez, D-Hoboken, unveiled legislation Monday
that would strengthen consumer protections against zealous marketing practices and abuses by credit card companies.
Menendez's bills, known collectively as the "Credit Card Bill of Rights," are designed to stop credit card issuers from aggressively targeting vulnerable
consumers and prohibiting steep, sudden hikes in fees and interest rates.
A spokeswoman for a trade association representing many of the nation's banks called the measures unnecessary and said some of the provisions could
actually harm consumers.
Menendez delivered his proposal in Jersey City on Monday morning, raising concerns about the growing problem of consumer debt, which has nearly
tripled in the past 12 years to an average of $9,300 per American household in 2004.
"More and more Americans are using credit card debt to manage daily living expenses such as basic living costs, medical bills and house or automotive
repairs," Menendez said in prepared remarks released by his Senate office.
While he said he does not absolve consumers of their personal financial responsibility, Menendez, a Democrat running for his first full term in the U.S.
Senate, said he wants to ensure the ethics of companies that are earning billions in profits from credit card users.
Menendez, a member of the Senate Banking Committee, said credit card companies have increased their solicitations to consumers 500 percent since
1990, to more than 5 billion in 2004. A member of Menendez's own staff got a solicitation for his 2-year-old child last year, the senator said.
Nessa Feddis, a spokeswoman for the American Bankers Association, a trade association in Washington, took issue with the proposals.
"Many of the provisions would actually end up harming consumers in the long term rather than helping them," she said.
For example, many credit card users under 21 are responsible adults, some with families and jobs. Restricting their access would be unfair, she said.
Feddis said banks are already required under federal law to assess credit risks before issuing borrowing limits. Menendez's proposal would keep credit
cards from some borrowers who would use credit only in emergency situations or to build their credit history, she said.
KEY POINTS
Sen. Robert Menendez's bills would:
Ban random credit card solicitations to consumers under 21; young consumers would have to actively seek credit card applications;
Prohibit companies from raising interest rates when a consumer misses a payment on an unrelated account;
Require companies to use the postmark -- not the date of processing -- to determine whether a payment was late; and
Ensure that companies determine whether consumers can meet credit obligations before offering them credit or raising their limit.
