Top Credit Card Issuers

Your 16-year-old has just received a major credit card with his name on it and a $1,000 spending limit. If you dropped him off at the mall, or left him home alone to shop online, would he have the knowledge and maturity to use it wisely?

Catherine Xia racks up about 8,000 yuan a month, almost 90 percent of her salary as an account manager at a Shanghai trading company, on her China Merchants Bank credit cards. Yet she never rolls over payments.

Claiming that unnecessarily high credit card transaction fees discriminate against small merchants and cost American families an average of $232 per year, a coalition of convenience stores, drug stores and community grocers has filed a class action suit against major banks and credit card associations. The antitrust, class-action lawsuit charges that Visa, MasterCard, Bank of America, Citibank, Bank One, Chase Manhattan Bank, J.P. Morgan, Chase, Fleet Bank, Capital One, and other banks are engaging in collusive practices by setting credit card interchange fees at "supracompetitive" levels.

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The Senate Permanent Subcommittee on Investigations conducted a hearing Tuesday at which credit card companies were criticized for using cardholders' credit ratings rather than payment history to justify arbitrary interest rate increases.

Remittance payments drawn on checking accounts present a challenge when coupled with the standard industry practice of extending the open-to-buy when a payment posts. While this enhances customer service, it also leaves issuers vulnerable to a host of fraudulent schemes including bust-outs, never pay defaults, and account takeover.

New York Attorney General Eliot Spitzer announced on Friday that the biggest credit card issuer in the US has agreed to block on-line gambling transactions with its credit cards in what appears to be a settlement of threatened legal action. The move by Citibank follows the lead of Bank of America, MBNA and Chase Manhattan Bank.

Democratic Sen. Carl Levin of Michigan, chairman of the subcommittee, said that it seemed "unfair" for credit card issuers to raise customers' interest rates if they paid their bills on time. He pointed out that other card issuers, such as Chase, have said that they will no longer raise interest rates based on changes to credit scores. He and Sen. Claire McCaskill, a Missouri Democrat, have introduced a bill that would limit the reasons for which credit card providers can raise interest rates.

Recent study from global market research company Synovate found that during the third quarter of the year, about 363 million of 1.29 billion credit card offers were mailed to high-risk households, or those using more than 30% of their available credit.