Federal Government Offers Insight Into Consumer Debt

[Apr 22, 2007.]

 

A study by the Government Accountability Office has offered new insight into the debt load facing many U.S. credit card-holders.

The report, along with information gleaned from hearings conducted by the U.S. Senate, indicate that consumers are facing debts much greater than the amounts that they initially charged. While the news may hardly be surprising - many households routinely face thousands of dollars' worth of credit card bills each month—such revelations might, in fact, prompt Congress to take action.

The issue revolves around "subprime" credit cards, a special kind of card which is issued to individuals who appear to have difficulty controlling spending. The cards have incredibly high fees and interest rates, burdening such individuals with mountains of debt.

The extra fees can include everything from annual fees to account set-up fees to program fees to monthly participation fees. When all the fees are added up, a consumer can easily find himself or herself over the card limit, resulting in an additional over-the-limit fee.

Card-owners can face additional penalties if they are shopping for a mortgage or if they end up paying their medical bills late.

The GAO indicated in its report that many credit-card agreements are incredibly difficult to understand and are written at a "27 th-grade level." Some observers say a number of modern credit card practices amount to usury and should not be tolerated in a compassionate nation.

Congressman Carl Levin, a Democrat from Michigan, indicated that it's time for Congress to address the issue. Consumer advocates hope that the federal government will take action which will better protect consumers, without preventing credit card issuers from earning a respectable profit.

Unless and until Congress takes action, however, consumers are advised to read each credit card agreement carefully to ensure that they will not be hoodwinked into paying excessive fees in connection with their credit card accounts.

Julie-Ann Amos
22nd April 2007

More Information:

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