Washington, D.C. – Today, Congressman Joe Donnelly announced the start of common-sense consumer protections against unfair credit card practices through the CARD Act, H.R. 627.  Known as the Credit Cardholder’s Bill of Rights, H.R. 627 passed the House with Donnelly’s support and was signed into law in May 2009.  The bill prohibits unfair interest rate increases and requires credit card companies to provide consumers with unprecedented levels of transparency in their card agreements.

“For too long, many credit card companies have used confusing and unfair practices that have contributed to the debt that many families now carry,” said Congressman Donnelly.  “The common-sense rules starting today will provide middle class families with the tools they need to make informed decisions about their finances.”

Starting today, credit card companies are required to give 45 days’ notice before increasing interest rates, changing certain fees, or making other important changes to the terms of a consumer’s card. Also, credit card companies are prohibited from increasing interest rates on existing balances.  Any interest rate increase can only be applied to new purchases, meaning cardholders now have the option to close out an account when interest rates are unexpectedly raised. 

Additional changes credit cardholders can expect include:
 

• Credit card companies can no longer charge interest on debts paid on time.
• Interest rate hikes on existing balances are prohibited, and can only be applied to future purchases.
• Credit card bills must provide information to clearly explain how long it will take to pay off the balance by making only minimum payments.
• Credit card companies will be restricted from allowing over-the-limit transactions without informing you.
• Any changes to a cardholder’s billing will require a statement explaining those changes at least 21 days before the payment is due.
   

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