In a double-barreled blast at the banking and credit industries, Rep. Frank Annunzio (D-Ill,) plans to introduce a bill today designed to cut the cost of credit cards and protect the privacy of bank accounts.
Claiming that credit card companies have taken advantage of a people "hooked on credit cards," Annunzio said yesterday the legislation would prohibit the annual fee now charged for many credit cards and eliminate the monthly charges for consumers who pay all of their bills each month.
"There are more than 500 million credit cards in circulation today," said Annunzio, who is chairman of the House Consumer Affairs Subcommittee which has scheduled hearings on the bill for September. "Unless adequate safeguards are present to prevent consumers from being ripped off, the credit card will become the most expensive piece of plastic in history."
Annual credit card fees, he said, have been institued by some credit card companies to skirt state usury laws. Other card issuers, he added, have accomplished the same thing by changing billing methods so that consumers are charged interest on purchases on the day of purchase rather than the day of billing.
Annunzio estimated his bill could save credit card users "millions of dollars a year."
The bill also sets stringent consumer protections for the operation of electronically-controlled accounts - aphenomenon which is fast becoming the norm in banks. In the not-too-distant future, nearly everyone will be able to pay bills, make deposits and switch funds between checking and savings accounts by pushing a button at home or placing a phone call to the bank.
This electronic revolution, however, has raised concern over who will be liable for errors and how consumers can guard against them. Annunzio's bill would lay primary responsibility on the banks.
The bill limits the liability of consumer for a stolen debit card (used to make a deposit or withdrawal by machine) to $50 and requires the bank to send a written receipt to a depositor for any transaction affecting the depositor's account. It also would allow a customer to stop payment on an electronic transfer.