Credit Card Bill to Hit House Floor
The Credit Cardholders' Bill of Rights will be debated and possibly voted on in the House today. The measures go beyond the credit card reforms proposed by the Federal Reserve.
The widely-publicized “Credit Cardholders’ Bill of Rights” is expected to see action today on the floor of the U.S. House of Representatives. The legislation is opposed by the White House and many banking groups.
The bill’s primary sponsor, Rep. Carolyn Maloney (D-N.Y.), sent out an advisory late Monday evening alerting interested parties that the bill had been added to the House calendar for Tuesday. Maloney’s office noted that she expected the bill, H.R. 5244, to pass, but that “floor action is unpredictable.”
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Opponents of the bill reiterated their complaints Monday. The White House issued a statement saying the bill would hamper banks’ ability to effectively price risk.
"For the credit market to operate efficiently, creditors must have the flexibility to react to changes in customer risk and market conditions," the White House said in the statement. “[The bill] would restrict when lenders may change terms of the credit agreement, significantly constraining the ability of financial institutions to adapt to changing credit risks and market conditions.”
The American Bankers Association announced Monday the launch of CardPolicyInfo.com, a Web site that provides “extensive background information on credit cards, the ongoing legislative and regulatory process, and tips for consumers on using credit cards wisely,” according to ABA’s press release. In particular, the ABA said that the site provides detailed information on the negative impact of “The Credit Cardholders Bill of Rights” and the ABA’s comments on credit card regulations recently proposed by the Federal Reserve, Office of Thrift Supervision and the National Credit Union Administration.
Maloney’s office said again on Monday that the bill would provide numerous protections to credit card consumers in the U.S. Some of the benefits noted by the office include:
- Banning retroactive interest rates increases on existing balances, except where the cardholder is over 30 days late making payment;
- Requiring card companies to give cardholders advance notice of an interest rate hike;
- Stopping “tricks and traps” that make cardholders incur rate hikes and pricey fees;
- Giving cardholders more control over their credit limits;
- Preventing card companies from issuing cards to minors.
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Comments
Comment from Anonymous on September 23, 2008 at 6:23PM EST
About time - the US is at least a decade behind Europe in providing a responsible set of safeguards for consumers. The current bad debts and social costs imposed on the general public are testimony to irresponsible issuance and laissez-faire policies.
Comment from Anonymous on September 23, 2008 at 8:21PM EST
Great another set of rules to protect the non paying credit card holder. When can we just make the bums pay what they owe.
Comment from DONALD DALY on September 23, 2008 at 8:25PM EST
It is long overdue. It used to be that the credit manager had to "manage" his portfolio and accept the risk of his decision. Then came the generation of credit executives that found a way to have their cake and eat it too, give everyone a card or two and wait for a slip and triple the interest rate along with fees for anything except aboslute perfection that are through the roof and are forcing this nation to it's knees. Replace Biden with Maloney and this country will be better off.
Comment from DONALD DALY on September 23, 2008 at 8:32PM EST
"The bill would hamper banks ability to effectively price risk"? Where have all the credit managers gone? Isn't it the banks job to know how to price risk? Why are the banks even allowed in the business or lending money if the only way to price risk is to get a guarantee to change rates and policies as they need to cover their inability to know how to run a lending business? There goes the White House again, all for big business whether oil, no-bid contracts or a lending industry who has forgotten how to do their job.
Comment from Anonymous on September 24, 2008 at 1:06PM EST
Amen. I had a personal experience with my credit card issuer. My fixed rate went from 9.99 to 12.99 several months ago with no notice. I'm at 1/3 the limit, and pay 3 times the minimum monthly, credit score over 800. When I called to question the rate increase I was told'economic conditions in America' is why they raised my rate. I replied my account is 'as agreed'. Again, 'economic conditions in America'. I wasn't satisfied, so I was put through to a 'loan specialist'. I told her per the website, I qualified for 7.99. She ignored me, told me they'd drop my rate to 9.99 for 60 days so I had time to find another card!!!??? You bet I paid them off, and found another card. You'd think I'd be a customer they'd want to keep. Who passed out 'dumb pills' to credit managers???