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Week of 1.2.2009

Credit Crunch

With the economy in a downward spiral, more and more people are taking advantage of credit card offers to make ends meet, but are the credit card companies actually taking advantage of their customers?

In the week in which federal regulators adopted sweeping new rules for the credit card industry, NOW meets families struggling to pay off their credit card debt. Such debt has become significantly larger thanks to questionable industry practices like doubling and tripling interest rates, increasing fees and penalties, and shrinking credit limits.

Have a question about your credit card? Email us and we'll answer selected questions online next week.
We meet people like Andrew Spurlock and his wife Michelle, who are raising three children while watching the interest rates and fees on their credit cards skyrocket. Michelle was horrified when her interest rate jumped from seven percent to 30 percent from one day to the next, despite claiming she always paid her monthly minimum. Michelle and her husband are fighting off financial ruin as they struggle to pay off their debt.

Harvard Professor Elizabeth Warren, an expert on debt and the middle class, says credit card companies are deceiving customers in order to maximize profits. "You would think that if you upheld your end of the contract that the contract would be binding. But in the case of credit cards, you would be wrong," Warren, tells NOW.

This week, NOW takes a hard look at the small print in credit card offers, and at Congressional legislation aimed at regulating the industry.

Are you getting the credit you deserve?

Helpful Tools and Links

NOW: What You Should Know about Your Credit Card—A financial guru shares crucial points about your plastic.

Credit card counseling in your state—A division of the U.S. Department of Justice called the U.S. Trustee's Office has a vetted list of credit-counseling agencies in your area.

CNN: Debt reduction calculator—Punch in some numbers and the calculator will tell you how long till you're debt free, how much interest you will pay, and more.

U.S. PIRG: A Consumer's Guide to Credit Cards (pdf)—Tips and tricks to avoid credit card debt, by a public interest advocacy group.

Debt Prison: History of U.S. credit cards—Why South Dakota is the credit card capital of the world, and other interesting facts about the past and present of plastic.

Proposed Legislation

Rep. Carolyn Maloney's "Credit Cardholders' Bill of Rights Act of 2008"—Summary of credit card reform legislation "aimed at leveling the playing field between credit card companies and consumers."

Sen. Chris Dodd's "Credit Card Accountability, Responsibility and Disclosure Act"—Summary of bill aimed at stopping credit card practices "that drag consumers into staggering amounts of debt."

In the News

Associated Press: New credit card rules to protect consumers

The New York Times: Given a Shovel, Americans Dig Deeper Into Debt

Reuters: Credit-card industry may cut $2 trillion lines: analyst

USA Today: Why banks are squeezing credit card holders—investment tactics threaten to create another type of financial crisis, analysts say.

Credit Crunch

Elizabeth Warren on Credit Card 'Tricks and Traps'

Your Credit Card: What You Should Know

Credit Cards: You Asked, She Answered

Bank of America's Response to Our Show

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