Sanity in the world of Banking?

In a story covered by most news services, it was announced that Congress is going to start investigating the policies of credit card issuers. To that I say, it's about time.

Having "been there, done that" at one point in my life, I can attest to the fact that banks not only kick you when you're down, they stomp the living crap out of you!! I can understand charging an overlimit fee, or a late payment fee, or even a returned check fee as a punishment for unwanted behavior. It's a way for them to recover costs and to reduce potential risk. The problem comes when the cardholder runs into a situation that becomes chronic.

A person who up until now has great credit, loses their job, incurs huge medical bills, or maybe goes through a divorce and suddenly falls behind on their credit card payments. The first problem is that the credit limit isn't really a limit at all. The credit card companies will continue to allow "automatic payments" that have been billed to your credit card to continue even above your credit limit. Next, you are charged the "overlimit fee" even though they allowed the charge. Finally, if you don't pay the entire amount over the limit, on time, in full, your interest rate is increased (not only on this card, but probably all your other cards as well), you pay a late fee, and the overlimit fee and this continues until you finally (if ever) catch up. The system seems designed to make sure that you don't ever catch up because your monthly payment goes sky high just when your ability to pay is reduced due to unforseen tragedy in your life.

I fully support the fees needed to reduce risk and unwanted behavior. I just have a problem with them going on in perpetuity. I would propose a limit on the fees charged in succession. If someone is overlimit for three months in a row, there is a problem. The line should be frozen (not necessarily cancelled) and an immediate payment plan worked out.

There has to be some responsibility on the credit issuer's part as well. There is nothing so intimidating for someone who previously had no problem paying bills as having to face a collector. There should be a special collection department for such people. I know there are programs out there and have even used them, but they should be made readily available (based on past history of the cardholder) and the normal collection channels should be immediately bypassed and the cardholder contacted by a "consultant" of some sort from the bank with the intention of developing a mutually agreeable plan to bring things back into compliance. The bank should not be waiting until the person who is trying to keep up finally screams uncle and begs for help from the bank.

This should be a one time only deal.....not meant for the chronic dead-beat. I would hope that Congress works WITH the banking industry to develop a plan that is good for all and doesn't just pander to the lowest common denominator which would lead to credit becoming inaccessible for all but the most credit-worthy. It would become a situation of credit being available to only those who don't really need it.

Thoughts anyone?