WASHINGTON – A new Government Accountability Office (GAO) report reveals that credit card issuers are missing the mark and doing a "poor job" at explaining their late fee policies and penalties to consumers. "With credit card penalty rates and fees now common, the Federal Reserve has begun efforts to revise disclosures to better inform consumers of these costs," notes the report.

"Credit cards have become a ubiquitous and indispensable part of the culture, with an estimated 690 million cards in Americans' wallets and more than $1.8 trillion charged on them in 2005," reports the Associated Press, adding, "Consumer groups have frequently criticized credit card fees as excessive. The banking industry maintains that the costs of using a card can vary according to the risk posed by the account holder." 

In its report, the GAO, the investigative arm of the U.S. Congress, found that credit card late fees averaged $34, an increase from $13 in 1995, while some card issuers "impose penalty interest rates of more than 30 percent on consumers who pay late or exceed the credit limit," notes the AP.  

The GAO recommends the Federal Reserve, "As part of revising card disclosures," should ensure that such disclosure materials "more clearly emphasize those terms that can significantly affect cardholder costs, such as the actions that can cause default or other penalty pricing rates to be imposed. "

Click here to read more about the GAO report, " Credit Cards: Increased Complexity in Rates and Fees Heightens Need for More Effective Disclosures to Consumers."