June 8, 2009

Whitehouse Hears From Rhode Islanders About Unfair Credit Practices

Rhode Island Senator Discusses Legislation to Crack Down on High Interest Rates

Providence, R.I. – On the heels of sweeping credit card reform legislation recently passed by Congress and signed into law by President Obama, U.S. Senator Sheldon Whitehouse (D-RI) met today with Rhode Islanders affected by unfair credit card practices at the John Hope Settlement House in Providence. Whitehouse heard from consumers and small business owners about the impact of high interest rates and other tricks and traps on their families and businesses.

“With the economy in recession and unemployment rates climbing, American consumers are relying more than ever on credit cards to make ends meet each month,” said Whitehouse. “While the credit card reform bill we just passed will protect consumers from some of the credit companies’ worst tactics, we need to do more to keep interest rates reasonable and help people stay out of debt.”

One attendee, Douglas Corey of North Scituate, described seeing the interest rate on his credit card more than double even though he made regular payments on the account. Corey wrote Whitehouse earlier this year that though he had been making regular payments for five years on a credit card with a 12.74 percent interest rate, after two months in which he paid less than the minimum, his interest rate jumped to 28.99 percent. After receiving Corey’s email, Whitehouse invited him in March to testify before a hearing of the Senate Judiciary Subcommittee on Administrative Oversight and the Courts about his experience. Corey was later featured in an ABC World News story about credit card debt.

Congress has since taken action, and on Friday, May 22, President Obama signed legislation to make credit card company practices more transparent and reasonable for consumers, prohibiting abusive practices that keep many Americans in a “sweatbox” of mounting debt. Whitehouse, who cosponsored that legislation, has also introduced separate measures to crack down on unfair credit practices. The Consumer Credit Fairness Act (S. 257) would provide incentives for credit companies to keep interest rates reasonable. The Empowering States’ Right to Protect Consumers Act of 2009 (S. 255) would restore to each state the ability to protect its citizens from unscrupulous lenders based in other states.

Also attending today’s meeting were other Rhode Islanders who shared their own stories of unexpected rate hikes and unfair practices, as well as Peter Lee, President and CEO of the John Hope Settlement House, and John Rao, an attorney with the National Consumer Law Center. Last December, Rao testified in an official hearing of the Senate Judiciary Committee on credit card reform held by Whitehouse at Rhode Island College. He discussed the vicious cycle of mounting debt and rising interest rates, which can affect many citizens who rely on credit cards to cover daily expenses.

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