Consumer Group Slams Credit Card MarketersA consumer group accused credit card marketers of greatly increasing the credit they offer to consumers while at the same time supporting new bankruptcy legislation that would make it harder for consumers to declare bankruptcy.
"Can any of [the credit card issuers] explain why they need [the bankruptcy] relief when their profits are increasing and they are trying to sell many more cards and offering cardholders far more credit?" Travis Plunkett, legislative director of the Consumer Federation of America, said at a news conference yesterday in Washington. "What's worse, erecting new bankruptcy barriers will encourage issuers to market and extend credit even more aggressively."
The CFA said that recent data show that credit card issuers dramatically expanded their marketing and available credit in the past year. Issuers also kept credit card interest rates up while the cost of loaning money plummeted, boosting profit by more than 50 percent over five years ago, the group said.
In the 12 months ending March 31, 2002, credit card issuers mailed 5 billion solicitations and offered more than $3 trillion of unused credit -- $30,000 per household, the CFA said.
But consumers are increasingly rejecting these solicitations and refusing to draw on the expanding credit lines, the group said. The CFA cited Federal Reserve Board data here, showing that revolving consumer credit, almost entirely credit card debt, declined $29 billion in the first three months of 2002.