WASHINGTON — House Financial Institutions and Consumer Credit Subcommittee Chairwoman Carolyn B. Maloney (D-N.Y.) introduced the Credit Cardholders' Bill of Rights Act of 2008 (H.R. 5244), on Feb. 7, 2008.
Maloney said the bill is a sweeping, comprehensive, yet balanced credit card reform legislation. Aimed at leveling the playing field between credit card companies and consumers, the bill abolishes major industry abuses that unfairly hurt consumers while fostering fair competition and free market values, she said.
"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," Maloney started. "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," said Maloney.
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"There is no doubt that credit card companies provide a valuable service and deserve to earn a fair profit, but consumers deserve the right to be able to understand their accounts and be empowered to control them. Regrettably, regulators and prior Congresses have dropped the ball on protecting consumers in recent years. My bill would give cardholders the information and rights they deserve to make decisions about their own credit," Maloney said.
Congresswoman Maloney held a number of congressional hearings and meetings last year to determine how Congress, federal regulators, and credit card companies could work together to help improve services and protections for card holders. In August, she released a set of common sense principles, or "Gold Standard Principles," aimed at guiding the shape and scope of the Credit Cardholders' Bill of Rights as well as industry self-regulation. Her final bill is the careful, deliberative product of more than a year's worth of study and analysis, she maintained.
Provisions of the Credit Cardholders' Bill of Rights Include:
1. Cardholders Deserve Protections against Arbitrary Interest Rate Increases.
-Requires card companies give cardholders 45 days notice of any interest rate increases.
- Gives cardholders the right to cancel their cards and pay off their existing balance at the existing interest rate and repayment schedule if they get hit with an interest rate hike; gives cardholders three billing cycles after the rate increase to say no to these new terms.
- Prevents card companies from retroactively increasing interest rates on the existing balance of a cardholder in good standing for reasons unrelated to the cardholder's behavior with that card (the so-called "universal default" rate increase).
- Prohibits card companies from arbitrarily changing the terms of their contract with a cardholder, banning the so-called practice of "any-time, any-reason re-pricing."
2. Cardholders Who Pay on Time Should Not Be Penalized.
- Prohibits card companies from charging interest on debt that is paid on time during a grace period. This prevents the so-called "double-cycle billing" practice.
- Prohibits card companies from slapping fees on the remaining interest-only balance of a cardholder who has paid his or her bill on time.
3. Cardholders Should Be Protected from Due Date Gimmicks.
- 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.
- Directs card companies to provide on every statement, a phone, and Internet address that a cardholder can access for payoff balances.
- Prohibits card companies from charging late fees when a cardholder presents proof of mailing his or her bill within seven days of the due date.
4. Cardholders Should Be Protected from Misleading Terms.
- Prevents card companies from using terms such as "fixed rate" and "prime rate" in a misleading or deceptive manner by establishing single, set definitions of those terms.
- Gives cardholders who get pre-approved for a card the right to reject that card up until the moment they activate it without having their credit adversely impacted.
5. Cardholders De-serve the Right to Set Limits on Their Credit.
- Requires card companies to offer consumers the option of having a fixed credit limit that cannot be exceeded.
- Prevents card companies from charging over-the-limit fees on a cardholder with a fixed credit limit.
6. Card Companies Should Fairly Credit and Allocate Payments.
- Directs card companies to fairly allocate payments on balances at different interest rates. Many card companies currently require cardholders to pay off a lower interest rate balance first.
7. Card Companies Should Not Impose Excessive Fees on Cardholders.
- Limits the amount of "over-the-limit" fees card companies are allowed to charge to three.
8. Card Companies Should Not Give Subprime Credit Cards to People Who Can't Afford Them.
- Requires that all fees for subprime cards, whose total fixed fees over a year exceed 25 % of the credit limit, be paid up front before the card is issued.
9. Congress Should Provide Better Oversight of the Credit Card Industry.
- Improves existing data collection on industry profits, as well as card fees and rates; requires this information to be presented to Congress every year.
Original Democratic co-sponsors include: House Financial Services Committee Chairman Barney Frank (D-Mass.) and Representatives Maxine Waters (D-Calif.), Luis Gutierrez (D-Ill.), Stephen Lynch (D-Mass.), Keith Ellison (D-Minn.), Steve Cohen (D-Tenn.), Chaka Fattah (D-Penn.), Maurice Hinchey (D-N.Y.), Jim Langevin (D-R.I.), Jerrold Nadler (D-N.Y.), Carol Shea-Porter (D-N.H.), Hilda Solis (D-Calif.), Peter Welch (D-Vt.), Albert Wynn (D-Md.), Peter DeFazio (D-Ore.), Charles Gonzalez (D-Texas), Gene Taylor (D-Miss.), David Obey (D-Wis.), Mazie Hirono (D-Hawaii), Debbie Wasserman Schultz (D-Fla.), Nancy Boyda (D-Kan.), John Dingell (D-Mich.), Corrine Brown (D-Fla.), Bennie Thompson (D-Miss.), Alcee Hastings (D-Fla.), Yvette Clark (D-N.Y.), Jesse Jackson (D-Ill.), Danny Davis (D-Ill.), Kirsten Gillibrand (D-N.Y.), Eddie Bernice Johnson (D-Texas), Diane Watson (D-Calif.), Michael Arcuri (D-N.Y.), Eliot Engel (D-N.Y.), John Tierney (D-Mass.), Chris Van Hollen (D-Md.), George Miller (D-Calif.), Jim Moran (D-Va.), Anthony Weiner (D-N.Y.), Neil Abercrombie (D-Hawaii), and Jan Schakowsky (D-Ill.).
There are no Republican co-sponsors.
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