Reform should include restraint on credit cards

Open the mailbox and, nearly every day, they're there. It's another offer for a new credit card, a zero-interest introductory offer or, horror of horrors, a credit card bill.

All day long, we're bombarded with the message -- subliminal or overt -- that buying this or that product will make us happy.

Couple opportunity, temptation and a consumer with anything other than an iron will, and you have a recipe for disaster.

Last year, as one Canadian newspaper noted, Americans put a record $1.045 trillion on their Visa cards alone -- roughly equal to the entire Canadian economy.

But we haven't been able to handle the debt. Last year, 1.5 million Americans filed for personal bankruptcy, down from a record 1.7 million in 2003.

Even a million and a half bankruptcies is too many, the U.S. Senate agreed, passing major bipartisan bankruptcy reform bill on to the House for consideration.

Among the reforms:

* A new "means test" to make sure that those who can afford to repay some of their unsecured debts are required to do so.

* A safeguard to allow judges to consider extenuating circumstances in each case, such as catastrophic illness or unexpected financial calamities.

* Continued Chapter 12 protection for family farmers.

* Safeguards to ensure collection of child support.

The bill also requires new, minimum payment and introductory rate disclosures for credit cards, as well as a "debtor's bill of rights" requiring bankruptcy attorneys and petitioners to disclose service fees.

There is definitely room for improvement when it comes to fees charged for credit cards, which have become a booming business for U.S. banks. Last year, they made $14.8 billion in penalty fees on credit cards, up from $10.7 billion in 2003.

A relatively new twist is "universal default," in which consumers can be charged high interest rates on all of their credit cards if they are late in paying any one of them.

To be fair, any final bankruptcy reform legislation should include measures to remove some of the temptation and traps sprung by credit card companies on unwary consumers.