05/22/2005 08:44 pm ET | Updated May 25, 2011

If Congress Listens, Who Cares If It's True?

You have a low interest credit card and you do everything the card company wants—payments on time to the company, payments on time to everyone else, clean fingernails—everything, so your interest rate stays the same—right?


After the Congressional Hearing on Tuesday where a former FBI director testified that his current boss, credit card giant MBNA, does not jerk up interest rates just because a customer is late on another bill, the emails started rolling in.

Mr. E from Seattle sent this story:

MBNA recently imposed a 27% "penalty" interest rate on my MasterCard account, without warning or explanation, despite that all of my accounts are current. When I called to ask for an explanation, I was told this: despite that I had paid the account as agreed, making at least the minimum payment on time each month, in their estimation I had carried too high a balance for too long a time and "was not aggressive enough" in repaying it. That was a surprise. Although I was well aware of the "universal default" clause in my MBNA card agreement, I never imagined that they could invoke a "penalty" interest rate even when no default had taken place.

Is that the deal? MBNA doesn’t even wait for you to be late on some other payment before raising the rate? It jerks up the interest rate even when you have made all your payments on time exactly according to the terms MBNA has put in its contract? And Mr. Freeh smiles throughout his testimony?

Mr. E draws his own conclusion:

If Mr. Freeh has testified that "MBNA does not practice universal default," then he is guilty of lying to Congress. Period.