House Vote Expected on Credit Card Reform Bill
House Vote Expected on Credit Card Reform Bill
While the government and treasury are spending a tremendous amount of time
and taxpayer money trying to save financial institutions, the House of
Representatives may finally vote today on the Credit Cardholders' Bill of
Rights Act (H.R. 5244).
"The timing on this is a bit ironic. This debate comes after several weeks
of proposed government bailouts for billions and billions of taxpayer
dollars to rescue and repair the damage done from bad loans," says Bill
Hardekopf, CEO of LowCards.com and author of The Credit Card
Guidebook. "We don't think it is unreasonable to ask the government
to consider the citizens and taxpayers themselves and give them a little
protection from credit card rate increases and unfair practices that can
create a financial crisis in household budgets.
"We feel this bill includes some very good reforms that protect the
cardholder from existing practices that are unfair, but still gives the
issuer the ability to price risk, protect themselves and make a profit,"
says Hardekopf.
The White House has an opposing view. On Monday, it issued a statement
saying it opposes the Cardholder Bill of Rights legislation because it would
constrain the ability of banks to price risk and would lead to less access
to credit and higher interest rates for consumers. It also said the bill would
significantly constrain the ability of financial institutions to adapt to
changing credit risks and market conditions. However, it says it is
concerned about unfair and deceptive practices and supports efforts to
protect consumers. But the White House feels that regulations, not
legislation, are the better way to address the issues.
"The legislation is expected to be brought up for debate and discussion
today in the House of Representatives, and is expected to pass. However,
consumers shouldn't get too excited right now because the passage process is
slow. It still has to pass in the Senate. It may be shelved until the new
President takes office.
"If you are in support of the Credit Cardholder Bill of Rights, this is a
very good week to contact your representatives," says Hardekopf.
Here is a summary of the Credit Cardholders' Bill of Rights as passed by the
House Financial Services Committee:
--Protections against arbitrary interest rate increases. Issuers would have
to give cardholders 45 days notice of any rate increase.
--Prevent issuers from retroactively increasing the interest rates on the
existing balances of a cardholder unless the cardholder is more than 30 days
late.
--Prohibit double-cycle billing and limit issuers from assessing fees on the
remaining interest-only balance of a cardholder who has paid his bill on
time.
--Protect cardholders from due date gimmicks. Give cardholders time to pay
their bills by mailing statements 25 calendar days before the due date. It
will also prohibit issuers from charging a late fee if cardholder can
present proof of mailing payment within seven days of due date.
--Cardholders who are pre-approved for a card have the right to reject
it up until the moment they activate it without having their credit adversely
impacted.
--Issuers should fairly credit and allocate payments at different rates.
They currently require cardholders to pay off a lower interest rate balance
first.
--Issuers should not impose excessive fees on cardholders. The proposed
reforms would cap the number of "over-the-limit" fees card companies are
allowed to charge to three. Some issuers currently charge an unlimited
number of fees when consumers exceed their credit limit.
The complete bill can be seen here:
http://thomas.loc.gov/cgi-bin/query/D?c110:2:./temp/~c110L7ZIRT::
Here is the White House statement regarding this bill:
http://www.whitehouse.gov/omb/legislative/sap/110-2/saphr5244-r.pdf
While the government and treasury are spending a tremendous amount of time
and taxpayer money trying to save financial institutions, the House of
Representatives may finally vote today on the Credit Cardholders' Bill of
Rights Act (H.R. 5244).
"The timing on this is a bit ironic. This debate comes after several weeks
of proposed government bailouts for billions and billions of taxpayer
dollars to rescue and repair the damage done from bad loans," says Bill
Hardekopf, CEO of LowCards.com and author of The Credit Card
Guidebook. "We don't think it is unreasonable to ask the government
to consider the citizens and taxpayers themselves and give them a little
protection from credit card rate increases and unfair practices that can
create a financial crisis in household budgets.
"We feel this bill includes some very good reforms that protect the
cardholder from existing practices that are unfair, but still gives the
issuer the ability to price risk, protect themselves and make a profit,"
says Hardekopf.
The White House has an opposing view. On Monday, it issued a statement
saying it opposes the Cardholder Bill of Rights legislation because it would
constrain the ability of banks to price risk and would lead to less access
to credit and higher interest rates for consumers. It also said the bill would
significantly constrain the ability of financial institutions to adapt to
changing credit risks and market conditions. However, it says it is
concerned about unfair and deceptive practices and supports efforts to
protect consumers. But the White House feels that regulations, not
legislation, are the better way to address the issues.
"The legislation is expected to be brought up for debate and discussion
today in the House of Representatives, and is expected to pass. However,
consumers shouldn't get too excited right now because the passage process is
slow. It still has to pass in the Senate. It may be shelved until the new
President takes office.
"If you are in support of the Credit Cardholder Bill of Rights, this is a
very good week to contact your representatives," says Hardekopf.
Here is a summary of the Credit Cardholders' Bill of Rights as passed by the
House Financial Services Committee:
--Protections against arbitrary interest rate increases. Issuers would have
to give cardholders 45 days notice of any rate increase.
--Prevent issuers from retroactively increasing the interest rates on the
existing balances of a cardholder unless the cardholder is more than 30 days
late.
--Prohibit double-cycle billing and limit issuers from assessing fees on the
remaining interest-only balance of a cardholder who has paid his bill on
time.
--Protect cardholders from due date gimmicks. Give cardholders time to pay
their bills by mailing statements 25 calendar days before the due date. It
will also prohibit issuers from charging a late fee if cardholder can
present proof of mailing payment within seven days of due date.
--Cardholders who are pre-approved for a card have the right to reject
it up until the moment they activate it without having their credit adversely
impacted.
--Issuers should fairly credit and allocate payments at different rates.
They currently require cardholders to pay off a lower interest rate balance
first.
--Issuers should not impose excessive fees on cardholders. The proposed
reforms would cap the number of "over-the-limit" fees card companies are
allowed to charge to three. Some issuers currently charge an unlimited
number of fees when consumers exceed their credit limit.
The complete bill can be seen here:
http://thomas.loc.gov/cgi-bin/query/D?c110:2:./temp/~c110L7ZIRT::
Here is the White House statement regarding this bill:
http://www.whitehouse.gov/omb/legislative/sap/110-2/saphr5244-r.pdf
