Crash ratings for credit cards?

The Center for American Progress says a credit card safety rating system -- similar to crash test ratings for cars -- would help consumers see which credit cards would give their finances the biggest dings.

The proposal is one of several included in a recent report issued by the Washington, D.C.-based think-tank in response to the accelerated growth in credit card borrowing, credit card default and aggressive marketing of credit cards to consumers.

"As borrowing in the mortgage market slows, credit card borrowing is accelerating -- a dangerous trend because borrowers still face weak income growth. That means the credit card market could eventually run into the same problems that now afflict the subprime mortgage market," write Tim Westrick and Christian E. Weller in their report, "House of Cards."

Westrick and Weller's concerns are twofold. First, with financial institutions already trying to cope with the subprime mortgage losses, the amount of credit card debt write-offs rose from 3 percent to 4 percent between March 2006 and September 2007 -- a growth rate of 34 percent. This rapid increase in credit card defaults will only compound financial institutions' problems, they predict. Secondly, Westrick and Weller say that the credit card industry is aggressively marketing credit cards with "subprime-like lending terms" that include fees and rates that are buried in the fine print of card offers -- furthering the risk to consumers to end up with credit card balances they just can't live with, or pay off.

The solutions offered by Westrick and Weller include the adoption of a credit card safety rating system where cards "would be awarded stars based on a points system, with cards earning points for consumer-friendly terms and losing them for terms designed to get consumers in trouble." Other recommendations include support of current legislative proposals that attempt to ban unfair and abusive practices by the credit card industry.

My only suggestion is that if the credit card rating system is adopted that it also ask the card companies to require its cards to have front, side and rear airbags that deploy when you've gone over your limit.