For Immediate Release
September 23, 2008 |
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FOR MORE INFORMATION:
Cullen Schwarz
Office: 202.225.4961
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House Passes Landmark
Credit Card Industry Reform Bill
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Legislation will Protect Struggling Consumers from
Unfair Credit Card Lending Practices
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(Washington D.C.)- The House of Representatives today passed legislation to curb unfair and deceptive credit card lending practices. Representative Levin is a co-sponsor of the Credit Card Holder’s Bill of Rights Act which was approved by a vote of 312-112. The legislation would put in place protections against arbitrary interest rate increases, due date gimmicks, and misleading terms.
“This legislation will level the playing field by putting an end to unfair and abusive credit card practices that outrage so many American families,” said Rep. Levin. “Americans are struggling to make ends meet and they have the right to be able to understand their credit card accounts, control their credit, and manage their debt.”
The legislation, which will now be sent to the United States Senate, provides crucial protections by addressing a variety of unfair, but unfortunately common, credit card practices:
Ends Unfair, Arbitrary Interest Rate Increases.
• Prevents card companies from unfairly increasing interest rates on existing card balances – retroactive increases are permitted only if a cardholder is more than 30 days late, if a pre-agreed promotional rate expires, or if the rate adjusts as part of a variable rate.
• Requires card companies to give 45 days notice of all interest rate increases so consumers can pay off their balances and shop for a better deal.
Lets Consumers Set Hard Credit Limits, Stops Excessive “Over-the-Limit” Fees.
• Requires companies to let consumers set their own fixed credit limit.
• Prevents companies from charging “over-the-limit” fees when a cardholder has set a limit, or when a preauthorized credit “hold” pushes a consumer over their limit.
• Limits (to 3) the number of over-the-limit fees companies can charge for the same transaction – some issuers now charge virtually unlimited fees for a single limit violation.
Ends Unfair Penalties for Cardholders Who Pay on Time.
• Ends unfair “double cycle” billing – card companies couldn’t charge interest on debt consumers have already paid on time.
• If a cardholder pays on time and in full, the bill prevents card companies from piling additional fees on balances consisting solely of left-over interest.
Requires Fair Allocation of Consumer Payments.
• Many companies credit payments to a cardholder’s lowest interest rate balances first, making it impossible for the consumer to pay off high-rate debt. The bill bans this practice, generally requiring payments to be allocated proportionally to balances that have different rates.
Protects Cardholders from Due Date Gimmicks.
• Among other measures, requires card companies to mail billing statements 25 calendar days before the due date (up from the current 14 days), and to credit as “on time” payments made before 5 p.m. local time on the due date.
Prevents Companies from Using Misleading Terms and Damaging Consumers’ Credit Ratings.
• Establishes standard definitions of terms like “fixed rate” and “prime rate” so companies can’t mislead or deceive consumers in marketing and advertising.
• Gives consumers who are pre-approved for a card the right to reject that card prior to activation without negatively affecting their credit scores.
Protects Vulnerable Consumers From High-Fee Subprime Credit Cards.
• Prohibits issuers of subprime cards (where total yearly fixed fees exceed 25 percent of the credit limit) from charging those fees to the card itself. These cards are generally targeted to low-income consumers with weak credit histories.
Bars Issuing Credit Cards to Vulnerable Minors
• Prohibits card companies from knowingly issuing cards to individuals under 18 who are not emancipated minors.
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To Contact Congressman Levin: -
Email Congressman Levin In Michigan: 27085 Gratiot Ave, Roseville, MI 48066 | (586) 498-7122 | (248) 968-2025
In Washington: 1236 Longworth House Office Building, Washington, DC 20515 | (202) 225-4961
