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Lobbyist Money Help  

Bill may prevent credit card cancellation

February 04, 1998
By: Emily Goodin
State Capital Bureau

JEFFERSON CITY - Credit card companies wouldn't be able to cancel your card just because you keep your bills paid under legislation getting an early hearing in Missouri's General Assembly.

"Some companies are beginning to cancel the credit cards of people who pay their balance on time every month," said bill sponsor Rep. Chuck Graham, D-Columbia.

These companies would cancel a card because they don't earn money on interest if you keep the card paid off, Graham said.

"It's a stupid business practice, but it's not illegal," said William Ratliff of the Missouri Banker's Association.

There is another problem with cancellation that both Graham and Ratliff mentioned. When a card is canceled it could be reported to a credit bureau as just canceled or as canceled by the company, which other creditors could interpret as negative to your credit.

"Paying credit and being a good creditor should not hurt you," Graham said.

While Graham's bill doesn't address this issue, he said he is open to suggestions regarding the problem.

"If it's a problem we didn't know about, that needs to be addressed," Ratliff said. "We have to do a little research."

While credit card cancellation is an issue that has gotten national attention, there may be little that Missouri can do about it.

Ratliff said Missouri does not have power to regulate the practices of banks outside of Missouri.

"It (the legislation) needs to be done on a federal level to have an impact," Ratliff said.

But Graham says there are pending court cases that would make the companies responsible to the state laws where the application was signed.

In addition to banks, Graham's bill would cover retailers who issue credit cards.

"We tend not to want to cancel people's cards because they pay them on time," said David Overfelt of the Missouri Retailers Association. "We encourage people to pay them on time."

Not many Missouri banks issue credit cards according to Ratliff. A few small independent banks do, as does Central Bank.

Most of Central Banks' accounts are closed because of two years of inactivity, according to Jerry Arthur, senior vice-president of the bank.

Graham's bill was heard before the House Consumer Protection Committee Monday night. The committee must still vote on whether or not to send it to the House floor.