Michael Filighera learned the hard way when he signed on for a credit card from Household Bank a year or two ago.
A 53-year-old former financial markets trader in San Francisco, Filighera knew enough to read the fine print in his agreement. "The information was clearly written, so I thought they were good," Filighera said. But he ended up discovering about a year later that he'd been paying a 27.99% rate on a card that he'd thought was only 19%. Now he's even more careful about screening his credit card companies.
Lawmakers are scrambling to address the problem. On Dec. 4, the Senate Committee on Homeland Security and Governmental Affairs had a hearing about unfair interest rates. The following day, Democratic senators Ron Wyden of Oregon and Barack Obama of Illinois introduced the Credit Card Safety Star Act of 2007, which would rate the consumer-friendliness of cards.
"It's always been an issue, but now people are more worried," said Mandy Walker, a senior editor at Consumer Reports in Yonkers, N.Y., which is published by the nonprofit consumer advocacy group Consumers Union.There are ways to screen credit-card companies. The Better Business Bureau offers information such as the size of a credit-card company's staff, when it was incorporated and whether it's a BBB-accredited business. The site also says how many and what kinds of complaints the BBB received about any given company in the last 36 months. For example, a peek at Washington Mutual's(WM) data on this site shows that the bank has an "unsatisfactory record" with the BBB due to unanswered complaints.
Washington Mutual declined to comment on the BBB results, but a spokeswoman noted that this year, J.D. Power and Associates named the company Best in Customer Satisfaction in banking.