Editorial: Giving some credit

Sunday, March 11, 2007 | 7:41 a.m.

The consumer credit and banking industries were criticized by senators last week for creating a system of convoluted billing practices and fees that make it almost impossible for Americans to dig their way out of debt.

Members of a Senate panel on Wednesday lashed out at credit companies for imposing ever-increasing penalties on balances that consumers were trying to whittle down. The industry was chastisted for confusing and seemingly arbitrary interest rate increases, some of which credit card companies have imposed when consumers fail to pay other creditors on time.

A recent story by the Associated Press reports that representatives of Chase Bank USA and Citigroup Inc. told the committee that their companies already were in the process of eliminating some of the fee practices that came under fire during the hearing. Chase also said it no longer will charge over-limit fees to credit card holders who are chronically over their credit limits for three months or more. When left to accumulate monthly, such fees perpetually place card balances over consumers' credit limits, making it virtually impossible for them to pay the card down to a level that prevents the penalty charges.

Sen. Norm Coleman, R-Minn., said that such "hefty fees and crippling penalties" unduly burden people who make regular payments but cannot cover the increases. They fall deeper into debt with each passing month, even if they no longer use the card.

Consumers also have trouble understanding why they are being charged extra fees because of what Coleman described as the "impenetrable" language credit companies use in disclosure documents that explain penalties and fees.

Certainly, people who use credit cards must bear the responsibility that comes with them, which includes making payments on time and paying interest on balances that are not paid off. But the nearly indecipherable credit contracts, interest rate increases that have nothing to do with the actual accounts in question and fees that make paying off balances impossible, are unfair. People who are making a concerted effort to get out of debt should be able to do so, and credit companies' unfair fees and interest rate hikes should stop.