(Picture from the paper -- Me with a few of the finance guides I authored)
by The Republican Newsroom
Monday April 27, 2009, 5:00 AM
By MICHAEL McAULIFFE
mmcauliffe@repub.com
Credit card debt reached $963
billion in January, an increase of 25 percent in the past decade, according to
the Federal Reserve.
At the same time, the federal
government has calculated that issuers collect around $15 billion a year in
penalty fees, an estimated 10 percent of the credit card industry's revenues.
In the midst of that evidence,
President Barack Obama met last week with industry executives and called for
sweeping changes in the treatment of customers while one company that provides
credit card counseling services in Western Massachusetts has enrolled more
people in a debt management program and another company has seen an increase in
the average amount of customer debt.
Obama said, "Some of the
abuses and some of the problems that a lot of people are familiar with"
need to be eliminated, including: doubling of interest rates, fees consumers
were unaware of suddenly being added to their bills, and a lack of clarity and
transparency in a card's terms and conditions.
"All the forms and statements
that credit card companies send out have to be written in plain language and be
in plain sight," Obama said. "No more fine print, no more confusing
terms and conditions. We want clarity and transparency from here on out."
Thomas J. Fox, outreach director
for Agawam-based Cambridge Credit Counseling Corp., said he would like to see
any changes in the credit card industry "that would give consumers the
ability to make informed decisions." Fox also said Cambridge Credit
Counseling, which has about 14,000 customers nationwide, had a 26 percent
increase in the number of clients enrolling in a debt management program in the
first quarter of 2009 compared to the number that enrolled in the first three
months of 2008.
"The increase is driven by
the credit card debt," Fox said.
Jennifer G. Morrow, a spokeswoman
for Consumer Credit Counseling Services, which has offices in West Springfield
and Amherst, said the average debt of clients requiring the company to
intervene for them with creditors rose from $22,535 in 2008 to $28,287 through
the first quarter of 2009.
Morrow also said her company has
nearly 90,000 people nationwide on a debt management plan with Consumer Credit
Counseling Services.
Springfield lawyer Justin H.
Dion, chairman of the bankruptcy section of the Hampden County Bar Association,
said credit card debt can be a crushing problem.
"Credit card debt is just
really a dangerous ... debt that can easily escalate to something that gets out
of control," he said.
Dion said he would like to see
banks agree to work with people who have missed one month's payment. That
effort might prevent many disasters.
"Once they miss that first
month, they're just now in a position that they're never going to get out of
it," he said.