WASHINGTON—In the midst of crafting a rescue bill for America’s financial sector, U.S. Rep. Bill Pascrell, Jr. (D-NJ-08) today prioritized protections for families on Main Street facing unfair practices from the credit card industry. By voting to approve the Credit Cardholders’ Bill of Rights in the House of Representatives, Pascrell moved to end the unfair, arbitrary credit card practices that are affecting a record number of American families.
The legislation requires credit card companies to provide 45 days notice before increasing interest rates and requires credit card companies to mail bills 25 days, instead of 14 days, in advance of their due date. It also takes action against subprime predatory lending and establishes clear definitions of terms like “fixed rate” and “prime rate” so that consumers are not misled or deceived by marketing and advertising ploys.
“It is time to make the credit market works for the American people instead of against them,” stated Pascrell. “Abusive credit card practices have distorted free market principles, squelched competition and ultimately hurt American families. The common sense measures in the Credit Cardholders Bill of Rights will protect consumers and push credit card companies to become more accountable for the financial risk of the consumers to whom they are lending money.”
Credit-card debt in the U.S. has reached a record high —nearly $1 trillion -- and the average American household’s debt from credit cards has risen from $2,966 in 1990 to $9,840 in 2007. And with the economy slowing, costs of daily living and unemployment rising, growing numbers of cardholders are unable to keep up with their payments.
In 2007, credit-card issuers imposed $18.1 billion in penalty fees on families carrying credit card balances—up more than 50% since 2003 and accounting for nearly half of the $40.7 billion in industry profits. This year, card companies will break all records for late fees, over-limit charges, and other penalties, pulling in more than $19 billion.
“From Wall Street to Main Street, America has been rocked by unsound credit and lending practices this year. I am pleased that Congress took this opportunity to stem the tide of credit card debt that has overwhelmed too many American families,” concluded Pascrell.
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