Summary of the Stop Unfair Practices in Credit Cards Act

The Stop Unfair Practices in Credit Cards Act would take the following actions:

(1) No Interest on Debt Paid on Time. Prohibit interest charges on any portion of a credit card debt which the card holder paid on time during a grace period.

(2) No Trailing Interest. Prohibit added interest charges on credit card debt which the card holder paid on time and in full.

(3) Limits on Penalty Interest. Prohibit interest rate hikes on a credit card account unless the card holder agrees to them at the time, and, in any event, limit penalty interest rate hikes to no more than a 7% increase.

(4) Apply Interest Rate Increases Only to Future Debt. Require increased interest rates to apply only to future credit card debt, and not to debt incurred prior to the increase.

(5) No Interest on Fees. Prohibit the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees.

(6) Restrictions on Over-Limit Fees. Prohibit the charging of repeated over-limit fees for a single instance of exceeding a credit card limit, and allow such fees to be charged only when a card holder’s action, rather than a penalty, causes the limit to be exceeded.

(7) Fixed Credit Limits. Require that card issuers must offer consumers the option of operating under a fixed credit limit that cannot be exceeded.

(8) No Pay-to-Pay Fees. Prohibit charging a fee to allow a credit card holder to make a payment on a credit card debt, whether payment is by mail, telephone, electronic transfer, or otherwise.

(9) Reasonable Currency Exchange Fees. Require currency exchange fees to reasonably reflect the credit card issuer’s actual costs.

(10) Prompt and Fair Crediting of Card Holder Payments. Require payments to be applied first to the credit card balance with the highest rate of interest, and to minimize finance charges. Prohibit late fees if the card issuer’s actions caused the delay in crediting the payments.

(11) Prime Rate Reference. Require interest rates linked to a “prime rate” to use the prime rate published by the Federal Reserve Board.

(12) Annual Audit. Require the credit card issuer’s primary regulator to perform annual audits to ensure compliance with credit card requirements and prohibitions.

(13) Improved Data Collection. Improve existing data collection efforts related to credit card interest rates, fees, and profits.

(14) Transition Period. Allow credit card issuers six months to implement the bill’s provisions.