News Updates Assemblyman Peter Rivera Calls For Ban on Banking Industry Practice of Increasing Interest Rates on Credit Card Holders for Unrelated Financial Activities

For Immediate Release
Friday, March 11, 2004
Contact: Guillermo Martinez - 518/455-5102

Anti-consumer schemes like Universal Default are ripping-off unsuspecting consumers and is a disturbing intrusion into the private matters of the card holder.

ALBANY, NY (03/11/04) –Assemblyman Peter M. Rivera, chairman of the New York State Assembly Puerto Rican/Hispanic Task Force, has introduced legislation to stop the anti-consumer practice by the Banking industry known as Universal Default.

According to Rivera, "Consumers are under attack by corporations that create schemes to overcharge them in order to increase corporate profits. The practice of raising interest rates on card holders for non-related financial activity is commonly referred to in the small print of credit card agreements as Universal Default."

"Non-related personal financial activity is being collected on every consumer and schemes are being cooked that penalize consumers, drain money from their earnings, and assaults consumers notion of financial stability. These practices must be stopped," added Rivera.

Currently, a late payment on a telephone bill could cause the interest rate on a credit card to soar. Most of the top ten credit card companies punish credit card holders for late payments on any other bill, even if the card holder has never been late on a payment to the credit card issuer.

For many consumers, interest rates on their credit cards have skyrocketed and most if not all consumers are unaware that credit card companies are basing the interest rate on future irrelevant financial activity of the card holder.

The legislation introduced by Rivera will prohibit credit card issuers from increasing the interest rates they charge on their credit cards based on irrelevant financial activity of the credit card holder.

According to Rivera, "Anyone reading through the extremely fine detail of these credit card agreements is sure to miss the sections that spell out that the rate of interest on their credit cards will be impacted by late payments to other entities. Most consumers don't know that this practice exists."

Rivera declared, "Everyone concerned with the overreaching actions of government should also be extremely alarmed by these schemes, cooked-up by private corporations, that amount to an invasion of privacy never before seen in the history of our democracy."

He added, "Under the disguise of good business practices, banking and insurance companies are developing financial practices that penalize everyone but the very rich in our society. This type of anti-consumer activity must be banned in New York State."