April 24, 2009
Credit card bill passes out of House committee – full floor votes up next!
(Washington, DC) — The House Financial Services Committee last Wednesday approved the Credit Card Holder Bill of Rights (HR 627), which would protect consumers from abusive credit card tactics, including random interest rates on existing balances, even for those who pay on time. The bill is expected to be voted on by the full House this week.
Protections include:
• Prohibiting card issuers from imposing new, higher interest rates retroactively to existing balances
• Requiring 45-day notice of any rate increase
• Prohibiting universal default — when the card company raises interest rates on a consumer who was late in making a payment to a different creditor
• Prohibiting double-cycle billing
• Require banks to apply payments either to balances with the highest interest rate, or proportionally across balances with different rates
We were disappointed that most provisions of the House bill would not go into effect for a year, but we will continue to push for a shorter time frame as a final bill emerges from the process. The one provision the House panel did agree to implement more quickly is the 45-day notice requirement for new rate increases on customers. That will go into effect 90 days after the bill is signed into law.
Look for upcoming news about the Senate’s reform bill, S. 414, which has passed the Senate Banking Committee but has yet to be scheduled for a full floor vote as leaders try to get enough votes for passage. You can use our toll-free number to make a call to your Senators asking them to support the bill and pass it now.
Obama pushes for stronger credit card laws
The President is adamant that consumer-friendly credit card legislation gets passed this year. He made it clear by holding a meeting April 23 with top executives from 14 credit card companies, where he indicated he will be seeking changes to the House credit card bill, which is headed for a full vote this week.
President Obama may seek the following changes which would go further than the current bill:
• Require card issuers to get permission before charging a fee for exceeding their credit limit.
• Require banks to apply payments first to balances with the highest interest rate.
• Require card companies to disclose on monthly statements how long it would take to pay off a balance when making only minimum payments, and highlighting how much more the consumer would pay in fees and interest when doing so.
• Require any low-interest teaser rate to be offered for at least six months.
• Require standardized bill due dates so they are the same every month.
Two Senators ask the Federal Reserve to stop rate increases now
Senators Dodd and Schumer sent a letter last week to federal banking regulators asking them to immediately implement a provision in the Fed credit card rules which limits interest rate increases on existing balances. The Fed rules do not go into effect until July 2010, and the Senators cited their constituents’ reports of getting hit with drastic and sudden rate increases as reason for the immediate change.