PREVENTS UNFAIR INTEREST RATE INCREASES AND TERM CHANGES•Prohibits arbitrary interest rate increases and universal default on existing balances;•Requires a credit card issuer who increases a cardholder's interest rate to periodically review and decrease the rate if indicated by the review;•Prohibits credit card issuers from increasing rates on a cardholder in the first year after a credit card account is opened;•Requires promotional rates to last at least 6 months.PROHIBITS EXORBITANT AND UNNECESSARY FEES•Prohibits issuers from charging a fee to pay a credit card debt, whether by mail, telephone, or electronic transfer, except for live services to make expedited payments;•Prohibits issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions;•Requires penalty fees to be reasonable and proportional to the omission or violation;•Enhances protections against excessive fees on low-credit, high-fee credit cards.FAIRNESS IN APPLYING AND TIMING CARD PAYMENTS•Requires payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest;•Prohibits issuers from setting early morning deadlines for credit card payments;•Requires credit card statements to be mailed 21 days before the bill is due rather than the current 14.Protects the Rights of Financially Responsible Credit Card Users•Prohibits interest charges on debt paid on time (double-cycle billing ban);•Prohibits late fees if the card issuer delayed crediting the payment;•Requires that payment at local branches be credited same-day.PROVIDES ENHANCED DISCLOSURES OF CARD TERMS AND CONDITIONS•Requires cardholders to be given 45 days notice of interest rate, fee and finance charge increases;•Requires issuers to provide disclosures to consumers upon card renewal when the card terms have changed;•Requires issuers to provide individual consumer account information and to disclose the period of time and total interest it will take to pay off the card balance if only minimum monthly payments are made;•Requires full disclosure in billing statements of payment due dates and applicable late payment penalties.INCREASED OVERSIGHT OF CREDIT CARD INDUSTRY•Requires each credit card issuer to post its credit card agreements on the Internet, and provide those agreements to the Federal Reserve Board to post on its website;•Requires the Federal Reserve Board to review the consumer credit card market, including the terms of credit card agreements and the practices of credit card issuers and the cost and availability of credit to consumers.ENSURES ADEQUATE SAFEGUARDS FOR YOUNG PEOPLE•Requires issuers extending credit to young consumers under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt; or proof that the applicant has an independent means of repaying any credit extended;•Limits prescreened offers of credit to young consumers;•Prohibits 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.Enhanced Penalties•Increases existing penalties for companies that violate the Truth in Lending Act for credit card customers.GIFT CARD PROTECTIONS•Protects recipients of gift cards by requiring all gift cards to have at least a five-year life span, and eliminates the practice of declining values and hidden fees for those cards not used within a reasonable period of time.TRANSPARENT CREDIT CARD PRICING•Requires the GAO to study the impact of interchange fees on consumers and merchants, specifically their disclosure, pricing, fee and cost structure.
That just sounds great to me. It's obvious that the credit card companies won't treat people fairly by themselves, so perhaps some government ass kicking can get the job done*.
Anyway, in response to this, the credit card companies have sent a letter to the Senators responsible for the bill saying, in essence, "Don't do it, or we won't give people any more credit." The full letter here:
Dear Senator Reid and Senator McConnell:I am writing you on behalf of the American Bankers Association (ABA) with respect to our position on H.R. 627, the Credit Cardholders' Bill of Rights Act of 2009, currently being considered on the Senate floor.ABA recognizes that the Senate bill contains a number of important consumer protections embodied in recent regulatory action, and acknowledges that change is forthcoming in the way the credit card industry and its customers interact. However, we strongly believe that any legislation in this area needs to achieve the correct balance of consumer protections and market flexibility so as to not jeopardize access to credit.ABA remains very concerned about the contents of H.R. 627 (as amended), and believes that if it is enacted as it currently stands, it will have a dramatic impact on the ability of consumers, small businesses, students, and others to get credit at a time when our economy can least afford such constraints.The bill contains various provisions that limit a lender's ability to manage risk, price fees, allocate payments, and otherwise prudently conduct business. We believe these limits will necessitate reductions in available credit given current economic conditions, while increasing the price of credit where it remains available. We are likewise concerned that amendments could be adopted on the Senate floor (such as interest rate caps, interchange, and bankruptcy provisions) that could seriously exacerbate these problems, with serious ramifications for consumers and the economy above and beyond those already in the bill.For the above reasons, we oppose H.R. 627 as it is currently constituted, and urge opposition to amendments that will further harm our ability to meet the credit needs of consumers and others. We ask that these concerns be addressed before this legislation is delivered to the President for his signature.Thank you for considering our views.Sincerely,Floyd E. StonerExecutive Vice President, Congressional Relations & Public PolicyAmerican Bankers Association
So, let me get this straight. If the government tries to regulate you, you'll put yourself out of business? Seems... smart. Yeah. I like how they say that the reform limits the companies' ability to "prudently conduct business." This is a load of bullocks (I love that word). Credit card companies reap billions a year in profits from credit card users, profits they get by treating customer unfairly. They are all guilty of the things this reform would ban, and while passing this reform would certainly drop the profit margins of these companies, it will absolutely not cripple them. This letter is little more than self-serving propaganda, an attempt to dance around the fact that their business practices are unfair to their customers and the fact that they don't care to make them fair. We can't hurt that bottom line, after all.
*Note: Regular readers of this blog may note that I am very much a fan of a small government, so this standpoint may seem completely out of line for those readers. I'd also like to address those who would argue that people who use their credit responsibly don't get hosed by the credit card companies.
I have several credit cards in my name, all of which have small balances (in relation to their respective credit limits). I have never (with the exception of one, in my story below) paid any of them late, never gone over my balance - I have been a model credit card user. Anyway, pretty quickly after the economy started going to hell, my credit limits started dropping. By a ton. I used my CitiCard to purchase my surround sound system for my new place. It's a small limit card, so I had only about 50% of my balance left on it after my purchase. Well, I sent in a payment about two and a half weeks before the due date, but when I went back to check on my payment they had only applied part of the payment, just enough to leave the account with a past due balance of (get this) $1.50. They charged me a $35 late fee on a $1.50 balance that I paid!! I called their customer service - the lady on the phone was very nice, explained how it was an error on their end, took off the late fee, and correctly applied the payment so it covered the extra $1.50 that somehow wasn't covered the first time. No big deal.
A couple of weeks later, I go to use my card for another purchase, and it is declined. Knowing full well that I should have had plenty of money to cover my purchase, I called them back. I was informed that my credit limit had been dropped (by that smae 50% of my credit line!) due to a late payment. I explained to them how the "late payment" was a product of their system's screw up, but they refused to raise my credit limit again. No amount of logic or threats to cancel my account would win them over. What's more, to this day I have never received a letter informing me of this change. They just cut my credit limit without notifying me because they felt like it or something. I have been a loyal Citi customer for 8 years now, but as soon as my balance is paid off, I'm done with them.
I have a couple of other stories about bad credit card experiences, but I won't bother with those right now. Point is, though, that not only "bad" credit card customers are being treated unfairly by these companies. Everybody is.
In addition to the headaches caused by decreased balances, the methods used to calculate your FICO changed recently too. Less important are things like foreclosures and repos. More important are things like your ratio of used credit to available credit. When companies start lowering your limits, your ration goes up, and your credit score goes down. How is that fair to anybody.
Anyway, there's a bill in the Senate right now that will impose regulations on the credit card companies and prevent them from doing these things to people. You can use this 800 number to contact the Senate and let your Senators know that you want them to support this bill.
1-888-944-6762
