House Votes on Final Passage of Credit Cardholders’ Bill of Rights
(From Office of Congressman Jim Oberstar)
Washington DC – Landmark legislation to reign in predatory practices by credit card companies has passed the U.S. House of Representatives and is now on its way to President Obama to be signed into law in the next few days. “This is common sense legislation that is long overdue,” said Congressman Jim Oberstar. “Consumers deserve to be treated fairly and honestly by credit card companies instead of being hit with unfair fees and crippling interest rates that drive them deeper into debt.”
The Credit Cardholders’ Bill of Rights will prohibit retroactive interest rate hikes on existing balances and double-cycle billing – charging interest twice for balances paid on time. It will also require companies to give consumers at least 21 days to make their payment and mandate 45-days’ advance notice of interest rate, fees, and finance charges hikes, require payments to be applied fairly to the highest interest rate balance first, and strengthen credit card protections for young people.
“The practices banned by this bill will give consumers a chance to get out of credit card debt. Companies have been able to write contracts that allow them to arbitrarily raise interest rates to usurious levels and add unreasonable fees that make it almost impossible to pay off the credit card balance of the credit card,” said Oberstar.
Credit-card debt in the U.S. has reached a record high —nearly $1 trillion — and almost half of American families currently carry an average balance of $7,300 in 2007. One-fifth of those carrying credit-card debt pay an interest rate above 20 percent. In 2008, credit-card issuers imposed $19 billion in penalty fees on families with credit cards.
“These are practices that the Federal Reserve has already declared ‘unfair’, ‘deceptive’ and anti-competitive,” said Oberstar. “Today, Congress helped level the playing field for working families.”