Credit Cardholders’ Bill of Rights Act of 2008
New bill will further protect consumers from unfair practices…
New York Democrat Carolyn Maloney introduced a bill in the U.S. House of Representatives to give consumers new protections against the often criticized marketing and billing practices of credit card companies. The Credit Cardholders Bill of Rights Act of 2008, backed by House Financial Institutions and Consumer Credit Subcommittee Chairwoman Rep. Carolyn Maloney (D-NY) and Financial Services Committee Chairman Barney Frank (D-MA), would limit interest rate hikes and late fee penalties that unfairly squeeze profits from customers. It would also require 45 days notification when changes are made to the terms of the account from the current 15 day minimum.
Maloney said the House bill was balanced between consumers and companies, but bans “major industry abuses. “A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees,” Maloney said. “There is no doubt that credit card companies provide a valuable service and deserve to earn a fair profit, but consumers deserve the right to be able to understand their accounts and be empowered to control them.”
The proposed Credit Card Bill of Rights Act’s key provisions will require Congress to provide better oversight of the credit card industry and prohibit:
- Arbitrary interest rate increases and excess fees for any or no reason.
- Charging hidden and unfair interest rates on balances already paid off completely or repaid during the grace period.
- Applying unfair interest rate hikes retroactively to balances incurred under an old rate.
Several consumer advocacy groups, including the Center for Responsible Lending, Consumer Action, Consumers Union, and the Consumer Federation of America, are supporting the bill, although it doesn’t address some of the industry’s worst practices like universal default or over-limit fees. Travis Plunkett, legislative director of the Consumer Federation of America, said the new legislative proposal “is an important step forward in eliminating the worst credit card tricks and traps that sap billions of dollars from Americans’ wallets every year and illegitimately pump up issuers’ profits.”
Last year, the Federal Reserve proposed changes to disclosure rules for areas spanning new business solicitations to monthly statements in an effort to help consumers better understand fees and rates. “I am hopeful that there will be action in both houses,” Sen. Carl Levin from Michigan, who chairs the Senate Permanent Subcommittee on Investigations, said at the Reuters Regulation Summit in Washington.
* Find out more about the Credit Cardholders Bill of Rights Act >
