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 is a bit ironic. This debate comes after several weeks of proposed government bailouts for billions of taxpayer dollars to rescue and repair the damage done from bad loans. We don’t think it is unreasonable to ask the government to consider the citizens and taxpayers themselves and give them protection from credit card rate increases and unfair practices that can create a financial crisis in household budgets.
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 him or herself and make a profit.
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
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:
Here is the White House statement regarding this bill: