Want to earn an easy 18% or 20% on your money? Simple, say financial counselors. Just cut up your credit cards. If you can't afford to pay off your credit-card debts in full each month--and most people can't--stop using the cards. The average interest rate on credit-card debt now is 18.3%. Not having to pay that is equivalent to, well, putting money in the bank. The problem, of course, is that the 100 million Americans who hold 700 million credit cards are usually willing to incur fat interest charges for the convenience that they get in return. That being the reality, they ought at least to have a better idea beforehand what they will be paying. Legislation passed by the House this week is a step in that direction.
Currently, most credit-card holders find out only when they receive their cards what annual fee and interest rate they will be charged. The House legislation, which is expected to be approved by the Senate and signed by President Reagan, says that in the future these disclosures will have to be made when consumers apply for cards in response to magazine advertisements, direct mailings or telephone solicitations. The purpose is to allow some comparative shopping and, just maybe, to force greater rate and fee competition in the credit-card market.