FOR IMMEDIATE RELEASE:  May 19, 2009

CONTACT:  DC Press Office, 202-224-4159

WASHINGTON, D.C. – Senator John Kerry (D-Mass.), a senior member of both the Commerce and Finance Committees, today voted in favor of legislation to help Americans facing serious credit card problems.  The bill passed the Senate by a vote of 90 to 5.  

“We’ve got too many hard working families in Massachusetts struggling to keep their heads above water, and the last thing they need is to get whacked with unfair credit card fees,” said Kerry.  “This emergency legislation protects consumers from the abusive, confusing, and deceptive practices that are too commonly employed by credit card companies.  This bill will prevent unjust spikes in interest rates, prohibit exorbitant and unnecessary fees, and protect responsible credit card users including young people targeted by aggressive and irresponsible marketing offers.” 

The Credit Card Accountability, Responsibility and Disclosure (CARD) Act addresses the following credit card problems for consumers:

• Annual percentage rate changes.  The CARD Act would require that cardholders be given 45 days notice of interest rate and fee and finance charge increase, advance notice of any significant change in terms of the credit card account, and require clear notice of right to cancel credit card when the APR is raised or significant terms are changed;

• Universal default and other increases.  The CARD Act would prohibit universal default on existing balances; prohibit rate, fee, or finance charge increases on existing balances other than for the expiration of an introductory rate; a change in variable rate, an increase due to the failure of the cardholder to comply with the terms of a workout agreement, or a 60-day late payment by the cardholder where the cardholder can “cure” with six months of on-time payments.  The CARD Act would prohibit issuers from accelerating payments after a rate increase beyond prescribed limits;

• Reduction in APR.  The CARD Act would require a credit card issuer that increases a cardholder’s interest rate to periodically review and decrease the rate if indicated by the review; and

• Initial rates for new cards.  The CARD Act would prohibit credit card issuers from increasing rates on a cardholder in the first year after a credit card account is opened and require promotional rates to last at least six months.

·         Double-cycle billing.  The CARD Act would prohibit double-cycle billing and prohibit credit card issuers from imposing interest charges on any portion of a balance in the current billing cycle that is paid by the due date’

·         Overlimit fees.  The CARD Act would prohibit the charging of overlimit fees on a credit card account unless the consumer has expressly elected to permit the issuer to complete overlimit transactions on the account;

·         Other fees.  The CARD Act would prohibit credit card issuers from charging a fee to pay a credit card debt, whether by mail, telephone, electronic transfer, or otherwise, except for expedited service by a live service representative; and

·         Penalty fees.  The CARD Act would require penalty fees to be reasonable and proportional to the omission or violation including:

v  Requiring payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest;

v  Prohibiting credit card companies from setting early morning deadlines for credit card payments;

v  Requiring credit card statements to be mailed 21 days before the bill is due (the current requirement is 14 days);

v  Requiring that credit card issuers extending credit to consumers under the age of 21 to obtain an application that contains:  1) the signature of a parent, guardian, other qualified individual age 21 or older who will take responsibility for the debt; or 2) proof indicating an independent means of re-paying any credit extended;

v  Limiting pre-screened offers of credit to young consumers; and

v  Prohibiting increases in the credit limit on accounts where a parent, legal guardian, spouse or other individual is jointly liable unless the individual who is jointly liable approves the increase in writing.