Legislation to Create A Credit Cardholder's Bill Of Rights (Rep. Carolyn B. Maloney)

This week, I’m taking a first step towards remaking America by reintroducing the Credit Cardholder’s Bill of Rights. It is H.R. 627 in the 111th Congress, and we have 44 bipartisan original cosponsors.

This legislation aims to level the playing field between consumers and their credit card company, ensuring that they have protections against unfair and deceptive acts and practices. The bill that we are introducing is the same as the bill that passed the House last year on an overwhelming bipartisan vote of 312-112. The only change we have made is that we made the bill’s reforms effective 90 days after the legislation is signed by the President.

Joining me in this effort is Senator Schumer, a senior Member of the Senate Banking Committee, a great champion of consumer rights and the author of the Schumer Box, which provides standardized credit card disclosures. We are also supported by a broad coalition of consumer groups, unions, business groups and civil rights organizations who have made passage of this legislation a top priority for their organizations.

This legislation would end unfair and arbitrary interest rate increases that plunge people instantly into debt they can’t afford. The bill prevents card companies from increasing interest rates on existing card balances unless the cardholder is more than 30 days late paying, or if the increase reflects a variable rate or the end of a pre-agreed promotional rate. When an interest rate is being increased for new and future balances, the bill requires card companies to give 45 days notice.

The bill lets consumers set “hard” credit limits that they cant exceed and controls excessive “over-the-limit” fees.

It ends unfair penalties for cardholders who pay on time, such as double-cycle billing.

The bill requires fair allocation of consumer payments by prohibiting walling off a high interest rate balance when customers try to pay it down. It protects cardholders from due date gimmicks by giving consumers at least 25 calendar days to send in their bill and credits payments as on time as long as the payment is received before 5 p.m. on the due date. The bill protects vulnerable consumers from high-fee subprime credit cards and bars issuing credit cards to vulnerable minors.

Many of these same provisions have recently been the subject of regulations released by the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration, which found these practices to be unfair, deceptive and anti-competitive. The regulators should be applauded for their work, but I am concerned that these rules are not scheduled to go into effect until July of next year and regulations are much easier to change than legislation.

That is why we are pushing ahead with the reintroduction of this legislation and why we have included a 3 month implementation period. Consumers are suffering, these practices have been labeled unfair, deceptive and anti-competitive. The time to enact lasting reform is now. Consumer should not be forced to wait.