February 2008

It's About Time for a Credit Cardholder Bill of Rights

Dear Friend,

I recently joined Rep. Carolyn Maloney (NY), who chairs the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, in introducing the Credit Cardholders Bill of Rights, comprehensive credit card reform legislation to crack down on questionable credit card practices.

Getting hit with steep interest rate hikes and unexplained fees on monthly credit card bills has become all too common. A credit card agreement is supposed to be a contract, but in recent years, many working families have lost the ability to say no to sudden increases in the interest rate they're being charged or all kinds of add-on fees. I believe consumers have a right to understand their credit accounts, and should be able to control them.

The legislation establishes the following rights for credit cardholders:

• Cardholders will not be subjected to arbitrary interest rate increases.
  
  
• Cardholders will receive a notice of any interest rate increase at least 45 days in advance.
  
  
• Cardholders will have the right to pay off their existing balance at their current interest rate if the rate increased.
  
  
• Cardholders who pay on time will not be unfairly penalized.
  
  
• Cardholders will not be subjected to due date gimmicks.
  
  
• Cardholders will be shielded from misleading terms.
  
  
• Cardholders may set their own limits on their credit.
  
  
• Card companies will apply credits and allocate payments promptly and fairly.
  
  
• Card companies will not impose excessive fees on cardholders.

Card companies will not issue subprime credit cards to people who can't afford them.
We want all the details of the contractual relationship to be clear and understood by both parties - no surprises; no gimmicks. The best kind of consumer protection is infromation.

The Credit Cardholders Bill of Rights is the result of numerous hearings and meetings to determine the best way for Congress, financial regulators and credit card companies to work together to improve both the protections and services for card holders. The bill, which was just introduced on February 7th, has already attracted 44 co-sponsors, so the chances for even broader Congressional support and timely action are excellent.

 

Aloha,

Neil Abercrombie

Member of Congress