Consumers should either pay balances in full, or make the largest payments they can afford, and always pay early in the cycle to avoid late fees. But for years the firms lowered minimum monthly payments and encouraged the use of cards for everyday expenses—through rewards programs—so that many consumers accumulated massive amounts of credit card debt. Until recently, a consumer who owed credit card debt of $5,000 at a common 16 percent APR, who only made the typical 2 percent minimum payment, would take 26 years to pay off the card, even if it was cut up and never used again. Even the federal regulators finally took notice, and recently ordered banks to increase minimum payments by a modest amount. In 2005, Congress passed punitive legislation long sought by the powerful credit card industry to make it harder and more expensive to file for bankruptcy, and to force consumers to pay off more credit card debt if they do so. The new law includes a weak yet-to-be-implemented disclosure of how many years it will take to pay off the card if you only make the minimum requested payment. S 393, the Akaka Credit Card Minimum Payment Warning Act, would replace that industry-approved disclosure with a specific, customized warning. Although the ability of states to regulate the fees and interest rates (APRs) of credit card companies has been severely restricted by federal preemption doctrine, which has allowed the weak laws of Delaware and South Dakota to override the state laws where credit card customers live, states are taking action in one area. In response to the growing problem of aggressive credit card marketing to young people on college campuses, some states, such as California, have restricted campus credit card marketing. Several colleges and universities have taken similar actions at the local level. See the U.S. PIRG report, "Graduating Into Debt: Credit card marketing on college campuses," for more information. URL: http:// www.uspirg.org/financial-privacy-security/the-truth-about-credit
From: PBS Frontline This map shows the top ten credit card issuers, their state of charter (except for AmEx and Capital One that are not nationally chartered), and the maximum interest percentage cap for credit cards. These clusters were largely formed by a 1978 Supreme Court decision (Marquette National Bank v. First of Omaha Service Corp.) that determined national banks only have to obey the interest-rate caps of the state they are chartered in, not that of the state where a bank's customer lives. This means that when a bank from a state without limits on interest, like Delaware, issues credit cards to people living in states like Minnesota, which caps credit card interest at 18 percent, the customer can be charged any rate of interest. 
Credit Cards. They don't tell us how much it really costs to have one.
This is an excerpt from an interview by PBS of Edmund Mierzwinski of PIRG (Public Interest Research Group) in 2004.
Credit card loans are open-ended loans. They don't tell us how much it really costs to have one. If you only make the minimum payment, you end up paying much more in interest than you actually owe them in things that you've purchased. The credit card industries' long disclosure statements are meaningless in many ways. First of all, they don't give us the right to sue them, since they have mandatory arbitration clauses that say you've got to come to a kangaroo court that is dominated by former industry lawyers who may be magistrates in these arbitration agreements.
But mostly the credit card laws are disclosure laws, and they're meaningless, because you go to arbitration instead of court, and they don't tell you the most important thing, which is how long it will take to pay off your card if you make only the minimum payment. And the industry has fought state and federal attempts to enact legislation to require that disclosure.
The full interview is on the PBS Frontline web site.
Risking Homes to Pay Off Credit Cards
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The fear of overwhelming credit card debt is driving many Americans to hand their equity back to mortgage lenders in the form of "cash-out" refinances. Rather than generating cash to invest in the family's future or cover short term emergencies, cash-out refinances frequently serve as equity-draining transactions that only repay ("consolidate") short-term debts, such as credit card balances. Worse, the benefits of refinancing are often temporary, as homeowners build up additional new credit card debt and start the refinance process again.
Published: November 28, 2005
Source: Center for Responsible Lending
Author: James, Lisa; Robinson, Jabrina
The Plastic Safety Net: The Reality Behind Debt in America
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The rapid rise in debt among American households over the last decade is well documented, but it is not well understood. Prior to the survey findings presented in this paper, there have been no data available to study how many American households are using credit cards and how they are managing their debt. To answer these questions, Demos, along with the Center for Responsible Lending, commissioned a national household survey of households with credit card debt.
The survey provides new information about why households are in credit card debt, how long they have carried their debt and the impact this debt has had on their economic security. American families are turning to credit cards to make ends meet in an increasingly volatile economy.
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Statement of Mark Pearce, CRL President and COO
Credit Card Abuses
Americans now owe close to $800 billion in credit card debt. For many low- and middle-income households, credit cards are the primary safety net available to weather job losses and deal with unexpected expenses. In borrowing to make ends meet, these families struggle with high interest rates, excessive penalty fees and capricious contracts terms.
Subprime Lending is a Drain on Home Ownership
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"Yeah, people got bad mortgages. But others were able to finally buy a home" begins a recent article in a national magazine, repeating the common assumption that subprime mortgage lending has helped increase the overall level of homeownership.
But a new CRL analysis shows that while the subprime market has produced more than $2 trillion in home loans over the past nine years, these loans have led or will lead to a net LOSS of homeownership for almost 1 million families.
The reason for this net loss? From 1998-2006, only 9% of subprime loans went to first-time homebuyers, but over 15% of subprime loans ended (or will end) with borrowers losing their homes through foreclosure.
Mortgage Lending
In 2001, CRL estimated that predatory mortgage lending practices cost homeowners $9.1 billion each year, and the costs continue to mount. Nearly all abusive mortgage lending occurs in the subprime market -- home loans for people with impaired or limited credit histories.
Borrowing to Make Ends Meet
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Credit card debt is often dismissed as the consequence of frivolous consumption. But an examination of broad structural and economic trends during the 1990s -- including stagnant or declining real wages, job displacement, and rising health care and housing costs -- suggests that many Americans are using credit cards as a way to fill a growing gap between household earnings and the costs of essential goods and services. Usurious practices in the credit card industry, in the form of high rates and fees, have taken advantage of the increased need for credit.
Credit Cards: They Really ARE Out to Get You
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Getting trapped in the jaws of credit-card debt has become alarmingly easy. Thanks to cozy relationships that have developed over the years among lawmakers, federal regulators, and credit-card issuers, few consumer protections are left. IN THIS REPORT: Overview, What you can do, Top 10 credit cards.
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