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ARLINGTON, Va. – Representative John LaFalce (D-N.Y.), ranking member of the House Financial Services Committee has written a letter to Federal Reserve Chairman Alan Greenspan urging the Fed to crack down, through regulation, on eight specific credit card marketing and operational practices that he charged are “so egregious that I believe they are per se unfair and deceptive.” The list included: * Hiking the interest rates of balance transfers, even though the financial institution had promised the former rate was “permanent,” because the creditor had been late on a payment to another financial institution. * Providing credit cards to consumers with excessive debt and then hiking the interest rates on the basis of the consumer’s credit rating, without telling the consumer why the rate was changed or what they can do to improve their standing. * Offering students very low rates on cards without being clear that the low rates applied only to balance transfers. “Often young people do not realize that the introductory rate does not apply to purchases until they.purchase school books and supplies,” he wrote. * Failing to disclose the time limits for introductory low rates on subsequent account statements. “Often consumers do not realize that the lower rate has expired until the new finance charges are posted to the account and appear in a statement when it is too late,” LaFalce wrote. “Also, consumers often complain that they are charged a higher rate before the end of the introductory period,” he added. * Offering six months “interest-free” credit on purchases without clearly disclosing to consumers that the offer applies only to the actual payment of interest charges, but that interest charges on the entire amount financed will accrue during the first six months, regardless of how much of the balance has been paid off. * Failing to adequately disclose the pitfalls surrounding balance transfers and courtesy credit card checks. “Hidden balance transfer fees turn an attractive interest rate into a rate that may be higher than the one charged by the prior company,” he wrote, adding: “courtesy checks often fail to disclose that making out the check to `cash’ will result in a higher interest rate.” * Encouraging customers to transfer balances with offers of lower rates on transferred balances, but if a transfer or accrued interest should push the account balance on the card above credit limits, consumers often find that the low initial rate on new cards or the lower rate offered for balance transfers are rescinded because the credit limits were exceeded. LaFalce wrote that since “many financial institutions” engage in one or more of these practices on a regular basis, “a regulation banning these practices, and other practices such as these, would be more efficient and bring faster relief to consumers than case by case adjudications” that the Fed had first proposed. [email protected]

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