Bill would outlaw some credit-card practices

WASHINGTON (AP) -- Legislation proposed Tuesday would outlaw some credit-card billing and interest-rate practices that critics say confuse consumers and can push them deeper into debt.
The bill authored by Sens. Carl Levin, D-Mich., chairman of the Homeland Security and Governmental Affairs Committee's investigative panel, and Claire McCaskill, D-Mo., would ban interest from being charged on any portion of a credit card debt that the consumer paid on time during a grace period.
It also would limit so-called penalty increases in interest rates, which are imposed when a payment is made after the due date, to a maximum 7 percentage points above the current rate. The legislation was heralded by consumer groups. Many lawmakers, however, have expressed reluctance to impose mandates on how banks do business.
Sen. Christopher Dodd, D-Conn., who heads the Senate Banking Committee, which has jurisdiction on the issue, said he will examine the proposal "in a careful and thoughtful fashion."
Heightened scrutiny of credit card practices has come from the new Democratic-controlled Congress, which has put a number of consumer issues on its legislative agenda. With Americans weighed down by some 850 billion in consumer debt, the practices of the robustly profitable credit card industry are a compelling subject for scrutiny.
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