The Credit Cardholders Bill of Rights Act passes first hurdle…
Even with the chaos of the Bush administration’s $700 billion bailout plan, the Credit Cardholders’ Bill of Rights Act passed the first hurdle at the end of September with the U.S. House of Representatives passing legislation that will limit surprise rate increases and fees for credit card users. And, among other things, it requires credit card issuers to give account holders 45 days notice of any increases in interest rates and monthly bills to be mailed at least 25 days before the due date, up from the current minimum 14 days.
With the strong support of consumer groups, however, the bill faces an uphill battle and uncertain fate in the Senate. The bill has vigorous opposition from the White House, saying the bill would lead to less access to credit and higher interest rates for consumers. “For the credit market to operate efficiently, creditors must have the flexibility to react to changes in customer risk and market conditions,” the White House said. The provision “would restrict when lenders may change terms of the credit agreement, significantly constraining the ability of financial institutions to adapt to changing credit risks and market conditions,” the White House added.
The biggest five financial institutions, Discover, Bank of America, Citi Bank, JPMorgan Chase and Capital One, compete against one another and more than 6,000 other institutions for the U.S. credit card market. “In today’s turbulent economic times, consumers deserve a careful and balanced approach when considering potential changes to consumer credit and the credit card industry,” said Chase Card Services spokeswoman Stephanie Jacobson, adding that the company was disappointed in the vote. “Consumers have benefited from a competitive marketplace that allows for pricing based upon risk.”
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