Senators to Grill Card Issuers on Interest Rates

A U.S. Senate committee tomorrow will hear from leaders of three major credit card issuers as it reviews the way the industry treats interest rates on credit cards.

The Senate’s Permanent Committee on Investigations reports it will examine how some issuers increase the APR on card accounts of cardholders that are in compliance with the terms of their credit card accounts.

The committee is scheduled to hear testimony from Bruce L. Hammonds, president of Bank of America Card Services; Roger C. Hochschild, president and chief operating officer of Discover Financial Services; and Ryan Schneider, president for card services of Capital One Financial Corp. The committee will also hear testimony from three consumers who experienced the increases in their APRs.

The hearing at 9:30 am Eastern on Tuesday is a follow up to a committee hearing in March that covered credit card grace periods, interest charges on debt that was paid on time and card fees.

The committee is led by Sen. Carl Levin, a Michigan Democrat who introduced a bill in May that would stop credit grantors from charging interest on debt paid on time, cap interest rate increases that lenders impose after a consumer is late with payments and address the tightening time frame that some issuers allow their cardholders to pay their monthly bills. 

The Washington Post reported yesterday that Sen. Christopher J. Dodd will introduce legislation early next year on the credit card industry. Dodd, a Connecticut Democrat, is chairman of the Senate banking committee.

In addition, Rep. Carolyn B. Maloney plans to introduce early next year a bill on the disclosure of credit card interest rates and fees, according to the Post. Maloney, a Democrat from New York, is chairwoman of the Financial Institutions and Consumer Credit subcommittee of the Financial Services Committee.