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    Government Study Criticizes Credit Cards' Policies on Late Fees

    WASHINGTON - Credit card issuers have done a poor job of explaining their policies on fees and penalties to consumers, according to the results of a new study by the Government Accountability Office, the investigative arm of Congress.

    WASHINGTON - Credit card issuers have done a poor job of explaining their policies on fees and penalties to consumers, according to the results of a new study by the Government Accountability Office, the investigative arm of Congress.

    The report, which covers the fees, interest rates, and disclosure practices tied to 28 popular credit cards, revealed that late fees averaged $34 now, up from $13 in 1995. At the same time, some credit card issuers impose penalty interest rates of more than 30 percent on consumers who pay late or exceed the credit limit.
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    The study also found that holders of nearly half of all active credit card accounts paid little or no interest in 2005, because they generally paid their balances in full.

    The report criticized the largest companies' disclosure material, saying the disclosures are written in language that is hard to understand; important information is buried in text; and companies fail to put related material together and use small typefaces.

    The report recommended that the Federal Reserve revise rules on credit card disclosures to require that they more clearly emphasize penalty fees and rates and what triggers them.

    According to an Associated Press report, Edward Yingling, president and chief executive of the American Bankers Association, acknowledged that "the disclosure system is not working well" and "needs to be fixed."

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