Several credit card companies have begun to automatically increase credit card holder interest rates when their customers’ credit scores drop, according to an investigation that will be the focus of a US Senate subcommittee hearing on Tuesday. According to the report, Bank of America and Discover Financial Services monitor credit reports and use “universal default” clauses in customer contracts to justify raising interest rates, even for customers with a good payment history.

Credit card companies contend that they have to “price risk” and this is best done through the use of credit reports – which are the closest thing they have to a risk measure. However, consumer activists say that customers should not face any “penalties” since they have not committed any mistakes yet – that is, they have no late payments. The arguments against such provisions gained traction after Citigroup and JP Morgan recently pulled their own programs doing the same thing amid controversy.

Is this excessive or simply a prudent business move? Well, that is a question that the US Senate will have to answer during their next subcommittee meeting.