With arbitration clause you can't sue credit card issuer without it you pay more

In order to avoid court and resolve consumer disputes in a very low cost and fair manner, credit card agreements typically include an arbitration clause that waives a card holder's right to sue. This gives banks the ability to use the clause defensively to protect against lawsuits, or offensively to go after debt collections.

A Congressional committee held a hearing on the Obama administration's proposal to ban arbitration clauses from credit card agreements as part of a wider push for consumer protections. The administration has already passed sweeping new regulations that prohibit widely criticized credit card practices such as arbitrary interest rate hikes and unfair penalty fees.

According to the Public Citizen report, arbitrators earn about $400 or more an hour, with some earning up to $10,000 a day. Besides, the study shows that credit card companies track arbitrators' rulings and do not enlist the arbitrators who rule against them.

Although banks more commonly use arbitration to go after unpaid debts, it also provides an important shield against costly class-action cases. Alan Kaplinsky, a partner at Ballard, Spahr, Andrews & Ingersoll LLP and chair of its consumer financial services group, says that opening the door for class-action and other lawsuits would push up the costs of banks' legal costs, which in turn would be passed on to consumers.

John Ulzheimer, president of consumer education for Credit.com., said a ban on arbitration clauses could be a way to ensure banks are careful to follow the new credit card regulations by taking away their shield against costly lawsuits.