House Financial Services Committee passed the Credit Cardholders' Bill of Rights by a 48 to 19 vote. The bill is expected to go to a full House vote next week. President Obama who clearly agrees the current credit card practices not only hurt cardholders but our economic recovery has called in the major credit card company execs to meet with him today.
If this bill is passed, it would set new limits on when credit card companies can raise interest rates and assess fees and finance charges providing credit card customers crucial protections against unfair, deceptive, and anti-competitive credit card practices, which include double-cycle billing, due-date gimmicks, and retroactive interest rate hikes.
Summary of the Credit Cardholders' Bill of Rights
Ends Unfair, Arbitrary Interest Rate Increases.
• Prevents card companies from unfairly increasing interest rates on existing card balances -
retroactive increases are permitted only if a cardholder is more than 30 days late, if a pre-agreed promotional rate expires, or if the rate adjusts as part of a variable rate.
• Requires card companies to give 45 days notice of all interest rate increases so consumers can pay off their balances and shop for a better deal.
Lets Consumers Set Hard Credit Limits, Stops Excessive "Over-the-Limit" Fees.
• Requires companies to let consumers set their own fixed credit limit.
• Prevents companies from charging "over-the-limit" fees when a cardholder has set a limit, or when a pre-authorized credit "hold" pushes a consumer over their limit.
• Limits (to 3) the number of over-the-limit fees companies can charge for the same transaction- some issuers now charge virtually unlimited fees for a single limit violation.
Ends Unfair Penalties for Cardholders Who Pay on Time.
• Ends unfair "double cycle" billing - card companies couldn't charge interest on debt
consumers have already paid on time.
• If a cardholder pays on time and in full, the bill prevents card companies from piling
additional fees on balances consisting solely of left-over interest.
Requires Fair Allocation of Consumer Payments.
• Many companies credit payments to a cardholder's lowest interest rate balances first, making it impossible for the consumer to pay off high-rate debt. The bill bans this practice, generally requiring payments to be allocated proportionally to balances that have different rates.
Protects Cardholders from Due Date Gimmicks.
• Among other measures, requires card companies to mail billing statements 25 calendar days before the due date (up from the current 14 days), and to credit as "on time" payments made before 5 p.m. local time on the due date.
Prevents Companies from Using Misleading Terms and Damaging Consumers' Credit
Ratings.
• Establishes standard definitions of terms like "fixed rate" and "prime rate" so companies can't mislead or deceive consumers in marketing and advertising.
• Gives consumers who are pre-approved for a card the right to reject that card prior to
activation without negatively affecting their credit scores.
Protects Vulnerable Consumers From High-Fee Subprime Credit Cards.
• Prohibits issuers of subprime cards (where total yearly fixed fees exceed 25 percent of the credit limit) from charging those fees to the card itself. These cards are generally targeted to low-income consumers with weak credit histories.
Bars Issuing Credit Cards to Vulnerable Minors
• Prohibits card companies from knowingly issuing cards to individuals under 18 who are not emancipated minors.
Swift Implementation of Provisions
• Legislation would be implemented 3 months following the President signing the legislation into law.
If this bill is passed, it would set new limits on when credit card companies can raise interest rates and assess fees and finance charges providing credit card customers crucial protections against unfair, deceptive, and anti-competitive credit card practices, which include double-cycle billing, due-date gimmicks, and retroactive interest rate hikes.
Summary of the Credit Cardholders' Bill of Rights
Ends Unfair, Arbitrary Interest Rate Increases.
• Prevents card companies from unfairly increasing interest rates on existing card balances -
retroactive increases are permitted only if a cardholder is more than 30 days late, if a pre-agreed promotional rate expires, or if the rate adjusts as part of a variable rate.
• Requires card companies to give 45 days notice of all interest rate increases so consumers can pay off their balances and shop for a better deal.
Lets Consumers Set Hard Credit Limits, Stops Excessive "Over-the-Limit" Fees.
• Requires companies to let consumers set their own fixed credit limit.
• Prevents companies from charging "over-the-limit" fees when a cardholder has set a limit, or when a pre-authorized credit "hold" pushes a consumer over their limit.
• Limits (to 3) the number of over-the-limit fees companies can charge for the same transaction- some issuers now charge virtually unlimited fees for a single limit violation.
Ends Unfair Penalties for Cardholders Who Pay on Time.
• Ends unfair "double cycle" billing - card companies couldn't charge interest on debt
consumers have already paid on time.
• If a cardholder pays on time and in full, the bill prevents card companies from piling
additional fees on balances consisting solely of left-over interest.
Requires Fair Allocation of Consumer Payments.
• Many companies credit payments to a cardholder's lowest interest rate balances first, making it impossible for the consumer to pay off high-rate debt. The bill bans this practice, generally requiring payments to be allocated proportionally to balances that have different rates.
Protects Cardholders from Due Date Gimmicks.
• Among other measures, requires card companies to mail billing statements 25 calendar days before the due date (up from the current 14 days), and to credit as "on time" payments made before 5 p.m. local time on the due date.
Prevents Companies from Using Misleading Terms and Damaging Consumers' Credit
Ratings.
• Establishes standard definitions of terms like "fixed rate" and "prime rate" so companies can't mislead or deceive consumers in marketing and advertising.
• Gives consumers who are pre-approved for a card the right to reject that card prior to
activation without negatively affecting their credit scores.
Protects Vulnerable Consumers From High-Fee Subprime Credit Cards.
• Prohibits issuers of subprime cards (where total yearly fixed fees exceed 25 percent of the credit limit) from charging those fees to the card itself. These cards are generally targeted to low-income consumers with weak credit histories.
Bars Issuing Credit Cards to Vulnerable Minors
• Prohibits card companies from knowingly issuing cards to individuals under 18 who are not emancipated minors.
Swift Implementation of Provisions
• Legislation would be implemented 3 months following the President signing the legislation into law.
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Due to self-employment and no medical coverage we had to use our Credit Cards a lot more than we would have liked when I became sick in 2002. We have paid and paid and paid with no end in site to paying these cards off. My Husband just lost a major amount of his pay from his self-employment job and is now working not only for himself but for someone else as well. I think that we all need some major help with the credit card problem before any money can ever be put back into the economy. With my Husbands loss of his pay we are having a hard time just buying our food so we certainly don't buy anything we can possibly do without.
SCARED AND WORRIED
LISA M. GREENE
Chase has billed me $39.00 over the limit fee when I was not over the limit AND THEN lowered the limit so that I would be over the limit. I have a letter dated 7/17 that says my credit limit has been lowered (lowered my limit to less than my pre-existing balance) and I was quietly billed on 7/12 for $39.00. After contacting Chase customer service I was told that there was nothing that could be done about the fee. This seems plainly illegal when reading the above article...