The House Financial Services Committee is examining the ways to provide credit card holders with clearer information and more control over their credit accounts. The cost of credit card borrowing tends to be higher than other forms of credit due to revising fees and interest rates. The credit companies have the right to change the rates according to their own obscure criteria of credit risk. New legislations will help clarify the terms and conditions of credit card agreements and protect cardholders from excessive charges.

There could not be a better time for the changes. Subprime mortgage crises can lead to the crisis in financial services industry. The most part of customers' income goes for paying off the mortgage loans, so plastics have become the main source of getting money for everyday purchases. The level of debt is increasing. It goes without saying that such practice can lead to delinquencies or bankruptcies.

Credit companies are trying to prevent possible defaults and avoid loss of profits. They protect themselves by changing credit card agreements and raising interest rates when they see any reason to do it. If you disagree, they show you the point in your contract: "We reserve the right to change the terms at any time for any reason." The congress wants to protect cardholders against unexpected increases of credit card interest rates and make credit companies play fair.

This month the House Financial Services Committee has organized meetings with legal and financial experts, customers and credit companies' representatives to draw up new legislations which can improve the situation on the credit card market and level the rights of credit card issuers and consumers. For example, they want to require credit companies to give cardholders 45 days notice of any APR increases.

The Committee is also considering a new credit card rating system which will help better evaluate the terms and conditions of credit cards. Many Americans do not know why their APR goes up because most disclosures are written in the credit card fine print. As many financial experts say, it is read only by 50% of U.S. citizens.

Sen. Ron Wyden has proposed the Credit Card Safety Star Act. It works similar to the five-star crash test rating system for new cars. Credit cards will receive stars according to the amount of points they have earned. The plastics will accumulate points for consumer-friendly terms and lose them for unfavorable terms. This rating system will not set any interest rate caps or fixed fees, but it will enable customers to make smart choices and avoid possible traps.

Undoubtedly credit companies will try to fight against the new legislations. But the present-day situation on the credit card market shows that there is a pressing need for the changes. The new protective legislations will help Americans choose the best credit card offers without getting into trouble.