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House introduces ‘Credit Cardholders’ Bill of Rights’

Jeremy Simon

Editor’s note: See more recent items, Obama signs credit card reforms into law, Credit card reform legislation timeline

Now that presidential candidates, senators and the Federal Reserve have all weighed in with their thoughts on credit card reform, it looks like the House of Representatives has decided to have its turn.

House Financial Institutions and Consumer Credit Subcommittee Chairwoman Carolyn B. Maloney today introduced the “Credit Cardholders’ Bill of Rights Act of 2008” (H.R. 5244), “comprehensive credit card reform legislation aimed at leveling the playing field between credit card companies and consumers.”

The bill is aimed at “major industry abuses that unfairly hurt consumers while fostering fair competition and free market values,” A summary of the bill provides the highlights:

  • Requires card companies to give cardholders 45 days notice of any interest rate increases.
  • Prevents the so-called “universal default” rate increase.
  • Prevents the so-called “double-cycle billing” practice.
  • Gives cardholders time to pay their bills by requiring card companies to mail billing statements 25 calendar days before the due date (14 days is the current minimum).
  • Requires that payments made before 5 p.m. EST on the due date are considered timely.
  • Prohibits card companies from charging late fees when a cardholder presents proof of mailing his/her bill within 7 days of the due date.
  • Prevents card companies from charging over-the-limit fees on a cardholder with a fixed credit limit.

 

“A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees,” said Maloney, a Democrat who represents Manhattan and Queens. “This balanced, moderate bill simply levels the playing field between card companies and cardholders while fostering fair competition and free market values. It sets no rate caps, fees, or price controls, nor does it dictate any business models to card companies.”

The bill has broad Democratic support, with the release naming House Financial Services Committee Chairman Barney Frank and 40 representatives as original co-sponsors.

A spokeswoman for Maloney’s office said hearings are likely to begin in early spring.

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  • M Faraday

    Not a minute too soon.
    Chase, one of the biggest card providers / processors, makes it impossible to resolve their errors. Even letters to Jamie Dimon are ignored.
    Their will be an avalanche of public support for this and stricter regulation of an industry whose supposedly responsible leaders act as they do.

  • Mike

    I am sick of credit card companies. Washington Mutual is the worse. I had 2 cards with them and they raised the rates to 31.99% interest when I have never been late on a payment and never gone over my limit.
    I would think I have been a perfect customer but they are forcing me to get rid of them. I hope they go out of business

  • steve

    I’m technically bankrupt. . .yesterday I received approval for $50,000 limit credit card. Wheee!

  • B

    GE MONEY BANK is a rip off!!! They charge over the limit charges!!1 Please help the consumers!!!

  • ludwig

    It is about time. Lets see if this goes through this time. Credit Card companies have been very resistent to regulation and to help assure that they were immune to regulation have have had a large army of lobbyists who contributed in the past heavily to Congressmen’s political campaigns which is why bills like this have never been successful.
    Hopefully this will go through as President Bush II says that he will sign it into Law.
    I am glad to learn about the above cards as they have sent me offers in the mail. They seem shocked when I turn them down—it is usually them turning folks down. Oh the small pleasures of giving them a bit of their own medicine.

  • John

    Right, if you have multiple credit cards, they will all raise their rates to the maximum after one of them does, in my case it was WaMu, a credit card company that has literally ruined my life. I can’t afford to get my kids glasses or take them to the denitst, and am 1 month behind in my house payment because of these crooks. My minimum payment is my entire pay check for that week, they get 25% of my income and I can never pay them off. Hasn’t anyone heard of usury laws? And it was the legislators who set these ridiculous maximum rates, so don’t expect them to provide any meaningful change or relief.

  • Rebecca Aanestad

    5/4/08 Hello! Hell I can’t even get a credit card and now the rules are changing which will make it harder for me to get one! I have been paying my bills for 5 years now, trying to clean up my credit report and just when I am getting ready to apply for a credit card these people in Washington, D.C. now change the rules! Will I still be able to get a credit card TODAY and can you put me in touch with a cc company that can help me get my FIRST CREDIT CARD? Please help me I need one for my new website business at
    http://www.pacalaws.com. Thank you very kindly.
    Regards,
    Rebecca
    piercingeyes77@yahoo.com

  • Terri Daunic

    I have been fighting Tractor Supply Corp and Citi Bank…over erroneous late fees, interest and finance charges. I have written numerous letters explaining these incorrect charges as well as calling and talking to account representatives who have no idea how to handle the account. What “appears” to be late charges are continually being thrown into the “collections” box and they keep billing me and hitting my credit report because I won’t pay it…the original agreed upon amount has been paid…how do you fight these giants? This was a promotional program of one year same as cash. No one from Citi bank or TSC ever replies to my inquiries. I have now contacted the Office of the Comptroller of the Currency and am hiring an attorney to file suit. Any other ideas someone can give to me to clear my name with the three reporting agencies?

  • Jon S

    I have an advanta Business card that WAS at 9.9%, but out of the blue they raised it to over 26%! I don’t have a late payment on my entire credit report, much less with them! Luckily, the vast majority of the balance was at a 2.9% for life balance transfer rate that they couldn’t touch, so only a hair of my actual ablance was affected. FYI, if they try to raise your limit to some insane amount, just tell them that you refuse to accept the change and to close the account (you have to do it quickly, though). They are required to maintain the original APR and allow you to pay it down gradually at your old APR, but you won’t be able to charge any more on that card. That’s what I did with both Discover and Chase when they double/tripled (respectively) my APR for no reason. Then just go find yourself a new card from a respectable bank, like USAA. I told them I was moving, and they lowered my APR down to 4% on my entire balance for the next year to help me out!

  • KS

    I would like to see this proposal enacted as soon as possible. Credit card companies have been allowed to do anything and everything to entice and ensnare and even destroy anyone who gets into their hands. Example: Here is exactly what I received unsolicited from DISCOVER MORE CARD. In bold print on the front of the letter 0% + For Life = No Worries. enjoy a low 0% APR FOR LIFE on transferred balances. Make your money worth more. Customer service that puts you first. Apply today. However in tiny, tiny print scrunched up on the back of the letter, scattered among mundane regulations, it become apparent that in order to get %0 interest on your balance transfer you must make 2 regular purchases (15.99% APR) or cash advances (23.99% APR) every month. And, get this, IF MORE THAN 90% OF YOUR NEW BALANCE CONSISTS OF SPECIAL RATE BALANCE TRANSFERS, WE MAY INCREASE YOUR MINIMUM PAYMENT DUE TO 4% OF THE NEW BALANCE. And the clincher, we apply payments to balances with the special APR prior to the balances with the standard APR and those prior to the cash advance APR. In this tiny tiny print, they do advise that. Therefore your savings will be reduced by making additional transactions or having balances with standard APR which is what is REQUIRED TO OBTAIN THE 0% special!!!
    Today, this type of fraud is fine, a great way to put money into the hands of shareholder and make slaves for life of the customers. Lets be sure that tomorrow, this fraud will be called the fraud that it is and be illegal.

  • John J

    It is so sad….The only way i see to beat these credit cards is NOT to get them.If we could only pretend that there are no such things as a charge card and somehow hold out, i think you would shortly see the credit card companies re-thinking how to do business as there profits fall from lack of credit card use..I know its easier said then done, but maybe its time.

  • Stacy

    Even the new proposal is not enough. They need to cap the rates. Even on mortgages they are capped. Also mortgages are fixed interest. The credit card companies are bleeding us all dry. Everyone should know that you make your mortgage payment first, then your utilities and anything left can go to credit cards. Credit cards are unsecured. They need to be regulated.. The government needs to limit what they can charge period.

  • tracy

    I have 2 credit cards and was using them to rebuild my credit. When I would pay my bill online on the due date they were putting a late charge on it already and a couple of times made it go over the limit so I get that charge too. You call customer service and they have no clue what is going on. All this and they still get away with it.

  • Heidi

    I am just wondering if it will be a retro-active bill at all, or will all the late charges, over the limit fees and high interest rate already paid just be money in these card issuers pockets.

  • Rich the MBA

    I agree that this is a step in the right direction, but the rate needs to be capped. 32.99% when the Fed interest rate is at or near an all-time low? When I got my cards in the early 1990s, the fed was higher but the max rates I saw on my cards were 18.9%.
    The cap should be returned to 18.9%. That leaves a fair margin for them to make a healthy profit.
    i also would stop over limit fees period. They just help keep you overlimit. if you’re overlimit, they’ll still get their interest rate. if overlimit is a problem, just put an automatic brake on new purchases until the credit is freed up.
    If the above measures were put into practice, it would actually help credit card companies more than you think because there will be less bankruptcies. More people would be able to afford, hold and pay down credit. There’s still a healthy 5age of profit to be made. Everybody wins.

  • Benjamin Spencer

    I have perfect payment history. Bank of America needs a swift kick in the ass. They have closed an account of mine, and refuse to lower their interest rate. My only chance of ever paying off this debt is to STOP PAYING THEM? What business sense does that make?

  • Patty

    I received a letter today 12/13/2008)from Chase with no Letter Head to indicate the business name, no date, and no contact telephone number, informing me that my credit card account was closed due to inactivity. After calling and getting absolutely no where with 2 customer service reps and 1 manager, the account remains closed. (Chase closed account on 11/19/2008 I was informed on 2nd phone call).
    According to Regulation Z of the Federal Truth in Lending Act, cc issuers are required to give at least 15 days notice of any changes in terms including terminating accounts. At end of 2008 they are required a minimum of 45 days.
    Not only did they violate the law, they screwed my credit history/FICO score up. I am really thinking about reporting them and /or seeking counsil.
    BEWARE: use the credit card or lose it!!

  • Patty

    I received a letter today 12/13/2008)from Chase with no Letter Head to indicate the business name, no date, and no contact telephone number, informing me that my credit card account was closed due to inactivity. After calling and getting absolutely no where with 2 customer service reps and 1 manager, the account remains closed. (Chase closed account on 11/19/2008 I was informed on 2nd phone call).
    According to Regulation Z of the Federal Truth in Lending Act, cc issuers are required to give at least 15 days notice of any changes in terms including terminating accounts. At end of 2008 they are required a minimum of 45 days.
    Not only did they violate the law, they screwed my credit history/FICO score up. I am really thinking about reporting them and /or seeking counsil.

  • Lori

    I recently was informed by Chase that my interest rate will be increasing by more than 30% and at the same time the monthly amount due will increase by 150%. My two purchases were made using low interest rates “for the life of the loan”. Now they are changing the rules. I am submitting a letter refusing the new agreement and sticking to my old. I also have included two of my own alternatives with time lines and automatic acceptance clauses attached. I have excellent credit scores, no late payments for 25 years, 100 % payoffs, no late mortgage payments… What is happening to the consumers during this “Quick Fix” error? The changes have been squeezed in at the last hour prior to the new legislation occurring. The notification was buried in a monthly statement between a large assortment of advertisements, plain paper, smaller than most of the fancy advertisements; it appeared to be a hidden agenda that the notice wouldn’t be read or kept by most consumers.

  • bill

    BAIL OUT THE PEOPLE WHO ARE BEING RIPPED-OFF BY CREDIT CARDS CO.
    FED.RESERVE COULD LOAN 700 BILLION @ 5%
    TO THE PEOPLE. THE MONEY THEY SAVE FROM C.C. INT.
    WOULD PUT MILLIONS BACK IN THE ECONOMY….
    V E R Y S I M P L E !!!!!!!!!!!!!!!!

  • About time. Though, I think this will place a lot of added compliance strain on credit card companies As Rep Maloney said in a recent update to the bill – “A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees…. This bill levels the playing field between card companies and cardholders while fostering fair competition and free market”

  • Debbie

    I talked to my credit card company yesterday and was told that the government is requiring this 800-page bill to be fully implemented by the credit card companies beginning the year 2011. This means anything outlined in the bill will need to be completed beginning the year 2011. The person told me that part of the bill is to increase the monthly payment to 5% of the unpaid balance. According to him my monthly payment is currently based on approximately 2.2%. Increasing my monthly payment to 5% means that the monthly payment will more than double. He said in some cases they are already doing this to comply with the 2011 deadline . This is a bill that will affect cards that you currently have and any balances that remain on them. The individual told me that the government feels that people are taking too long to pay off their credit cards and this will force card holders to pay off their balances quicker. He also told me if you can’t pay the raised monthly payment then they will be allowed to access penalties and interest and late fees. If this is the case then I don’t see how this is going to help consumers. Sounds to me like this is still going to benefit the credit card companies. It seems to me that people are going to be in more financial trouble than they are already.

  • Jeremy F.

    The House of Representatives has passed the so-called “The Credit Cardholder’s Bill of Rights”. HR 5244 also known as The Credit Cardholder’s Bill of Rights imposes certain limitations on credit card institutions and the customers itself. The HR 5244 declared that: First, credit card companies cannot raise their rates without notice in 45 days or above, Second, not to force customers to pay off lower interest charges before higher interest, and last, no retroactive rate hikes allowed. Some says that it will limit credit card access but on the other hand, some says to maintain the practices outlawed are unfair to begin with. Many turn to an installment loans to pay off their credit cards, which is who the Credit Cardholder’s Bill of Rights aims to protect in the first place.

  • Pat

    I agree. The credit card companies have been allowed to steal from consumers for far too long. They promise one thing and deliver another. More and more people will be filing bankruptcy in the near future, mostly due to unscrupulous tactics by credit card companies that allow them no choice.

  • raj

    CHASE BANK IS THE BIGGEST THIEF. THEY CHARGING ME 30% FOR BEING LATE 7 DAYS. WHICH SUPPOSE TO BE LATE FEE NOT RAISING THE RATE FROM 1.99% TO 30%. WHERE IS THE LAW WHICH SAYS THAT THEY CAN’T RAISE THE RATE TILL 45 DAYS ETC. I GUESS JUST IN BOOKS OR ONLY FOR CONSUMERS.

  • Mortage Mom

    They are taking away our credit lines cause we use them. They are raising our rates because we pay them but we now have too much credit. Go to the store and find out you have no credit line on a card you had without disclosure one time! Talk about a kick in the face again. And we wonder why people stop paying these rip offs!