Senate Minority Leader Dina Titus, D-Las Vegas, testifies Tuesday in Carson City about a bill that would ban credit card companies from raising interest rates when consumers fail to pay other bills on time. Bill Uffelman of the Nevada Banking Association said banks should be allowed to consider some accounts. Photo by The Associated Press

CARSON CITY -- Senate Minority Leader Dina Titus testified Tuesday that credit card companies can jack up their interest rates to 24 percent if a customer fails to pay a water bill or gets behind on payments for a credit card issued by another company.

Titus, D-Las Vegas, asked the Senate Judiciary Committee to pass Senate Bill 302 that would eliminate "universal default clauses," the wording in credit card contracts that allows such increases.

The committee took no action on the bill. Committee Chairman Mark Amodei, R-Carson City, did not attend the hearing.

The bill must be approved by April 13 or it will be dead for the remainder of the 2007 legislative session.

Other members of the committee expressed amazement that credit card companies can penalize people for falling behind on payments that have nothing to do with their credit cards.

"I am going to put my money in a sock," quipped Sen. Mike McGinness, R-Fallon.

Titus said most people are not aware of universal default clauses, generally buried in small-print brochures that come with credit cards.

She said the clause allows credit card companies to increase their interest rates even if a customer files for other credit cards, seeks a car loan or home mortgage.

"They can change the rate of interest for any reason, even if you make a number of credit inquiries," she said. "I don't think many people know this. If you are a few days late on your water bill, your credit card rate may increase."

Banking industry lobbyists opposed the bill.

Both George Ross of Bank of America and Bill Uffelman of the Nevada Bankers Association said their clients do not use universal default clauses.

But they sought an amendment that would specify default on a payment would not be the "sole" criteria for increasing someone's credit card rate.

Uffelman said there is a lot of information available for customers interested in learning more about credit card rates.

"When you signed up for that credit card, you signed up for 32 pages of fine print," he added.

"There are two sides to a story," Ross added. "The bank wants customers. It isn't always about getting the highest rates."

Ross said financial information is taught in the public schools.