Wednesday, November 4, 2009

It's to little to late for us, but finally they did something for the rest of you...

House Votes to Speed Up Credit Card Reforms

Maloney-Frank bill will implement credit card reforms immediately upon enactment

Washington, DC – The House of Representatives today overwhelmingly approved legislation sponsored by Reps. Carolyn Maloney (D-NY) and Barney Frank (D-MA) that would push up the effective date of credit card reforms scheduled for next year to immediately upon the signing of the bill. Originally passed by Congress and signed into law by the President last spring, the Credit CARD Act had three staged implementation dates: August 2009, February, 2010, and August, 2010. H.R. 3639 moves up the remaining dates by which banks and credit card issuers would have to comply and applies to the largest card issuers that control over 80% of the credit card market. The bill passed by a vote of 331-92.

Rep. Carolyn Maloney said, “Card companies have redoubled many of the abusive practices that brought Congress to pass my original reforms last Spring. Rather than use the time-- time they asked for-- since the bill’s signing in May to prepare for the changes, they’ve raised rates and fees with absolutely no regard for the dire position of millions of their customers.

“I believe the card issuers have heard the message loud and clear today: their practices can no longer be tolerated. These reforms are crucial changes which level the playing field between card issuers and card holders. The reforms force the credit card market to actually function as markets should: by open competition among card offerings, with clear disclosure of interest rates, fees and other features. It bans rate hikes on existing balances, deceptive due-date gimmicks, and requires consumer opt-in to over-limit fees—and allows consumers enough time to switch cards if other terms and conditions change,” Maloney said.

“Consumers, especially in this economy, cannot wait any longer for these protections. I am extremely pleased that this legislation passed today,” said House Financial Services Committee member Rep. Dan Maffei (D-NY), who successfully offered an amendment today that will move the effective date of the bill to the date of enactment.

The House also approved an amendment, offered by Carolyn McCarthy (D-NY) and Betsy Markey (D-CO), permitting card issuers that adopt a moratorium on interest rate increases on current balances and new balances incurred before Feb. 22 to be exempt from the earlier effective date for a provision that requires an issuer to apply customer payments to the highest rate balance. Today’s bill also would exempt small credit card issuers that frequently outsource computer programming functions, and gift card providers, due to the fact that gift cards have already been printed and shipped for the 2009 holiday season. Both would have to comply with the later deadlines previously laid out in the Credit CARD Act.

The bill now goes to the Senate, where Sen. Mark Udall (D-CO) has introduced companion legislation (S. 1833) and Sen. Christopher Dodd (D-CT), Chair of the Senate Banking Committee, has introduced an immediate moratorium on retroactive rate increases (S. 1927).

The provisions which will take effect immediately upon enactment include:

·Prohibits arbitrary interest rate increases and universal default on existing balances;

·Prohibits issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions, and also limits over-limit fees on electing cardholders;

·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;

·Prohibits interest charges on debt paid on time (double-cycle billing ban);

·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;

·Requires penalty fees to be reasonable and proportional to the omission or violation.

·Requires that creditors periodically review all interest rate increases since January 2009 and reduce rates when a review indicates that a reduction is warranted.

These provisions already took effect last August 20th:

·Provide increased written notice to consumers of any increases in the interest rate or otherwise makes a significant change to the terms of a credit card account;

·Inform consumers of their right to cancel the card before the rate hike goes into effect;

·Send statements to consumers 21 days before the due date of any payments.



  1. Lord, Denise, my husband and I was just reading about this bill...just last week i received a notice that major changes was going to be made on my credit card account - i have not missed a payment nor have i been late, yet they are increasing the fees, etc. I will continue to honor the debt because I made it, but I understood the small print to late...If ever I get the chance I will pay it off, cut it up and burn the pieces...thanks for sharing this info and letting me vent!

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