EDITORIAL
Credit card firms share responsibility for debt

Many Hawai'i families soon will start feeling the pinch as they open mail and see a higher minimum payment amount on their credit card bills.

That little shock is a result of new federal guidelines aimed at keeping consumers from falling into a deeper hole of debt by requiring them to pay off at least 1 percent of the balance of what they owe, in addition to interest and fees.

This might help those trying to climb out of spiraling debt by pushing down the principal owed, albeit nominally. In a country where one in four pay only the minimum on their credit cards, even small steps should be applauded.

However, banks and other credit card issuers have shown an appalling lack of restraint in their own marketing strategies, including low teaser rates that encourage overspending. Efforts to attract new customers, for example, frequently target college students, many of whom lack both the income to pay off credit and the judgment to realize when to say "no."

U.S. Sen. Chris Dodd, D-Conn., again has sponsored legislation to beef up consumer protections — disclosing full costs of credit and, for applicants 21 and younger, requiring a co-signer or proof of financial ability to pay bills. The measure's first incarnation stalled last year.

In this time of increasing pressure on consumers, the Senate should give Dodd's Credit Card Act careful consideration. Not only are credit payments going up, but the new bankruptcy law provides less protection for the debt-ridden, too.

Unfortunately, there's little evidence of any public spiritedness among credit card companies in Hawai'i, either.

A bill introduced in the current legislative session would eliminate the annual percentage rate cap on outstanding credit card balances and allow local financial institutions to charge whatever rate the market will bear. Thankfully, following media attention and consumer outcry, that measure stalled in committee.

The rising minimum payments on credit card balances may force more fiscal discipline on consumers, but the industry seems to need a dose of the same medicine. Issuers of credit must accept their share of the responsibility for America's debt disease and curb profiteering on the backs of those who can least afford it.