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Ever wonder why your credit card bill comes to you from the likes of Sioux Falls, South Dakota? Basically because this state is the home of some major credit card issuers who take advantage of the state’s lack of interest in credit card consumer protection laws. Also this may be due in part to a lack of a state corporate income taxes. Many financial service companies located in South Dakota include Great Western Bank, Total Card Inc., BankFirst, Capital Card Services, HSBC, PREMIER Bankcard, and Wells Fargo.

Credit card fees over the years recently have skyrocketed from $2.6 billion in 1980 to over $22.5 billion in 2006. The kicker that has most ticked off consumer advocates is a practice called “universal default”. In this scheme when you are late paying any bill, the credit card company will raise your rate, sending some rates far higher than 20%. There have been many criticisms of this structure including the concept of one lender charging a higher price when their customer defaults with another lender has been compared to having a cartel, or price fixing structure.

There have been attempts by members of congress to simply outlaw universal default. One such congressman was Sen. Chris Dodd, D-Conn. Still these card companies are also amongst the pot political party contributors, and seeking meaningful changes such as these in the face of subtle corruption has always been a daunting task. “I’ve never been able to get a bill passed of any major significance because they’re so big and so influential,” says Dodd.

The American Bankers Association, a free-trade and professional association that advocates issues  deemed important by the banking industry in the United States has systematically been on the front of protecting the practice of universal default via it’s Political Action Committees which use lobbyists to work for laws that are advantageous for the banking industry.

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