WASHINGTON, DC – With concern growing over the financial pinch facing most Americans, Congressman Bill Delahunt today announced that he is co-sponsoring a comprehensive legislative proposal to reform questionable credit card industry practices.
“I’ve heard from far too many constituents who have seen their credit card bills grow because of automatic rate increases,” Delahunt said. “Consumer debt is at an all time high and dragging down the economy because credit card companies are making outrageous profits over exorbitant rate hikes. It is time for the Congress to step in and help level the playing field. ”
Last week, House Financial Services Chairman Barney Frank and Financial Institutions and Consumer Credit Subcommittee Chair Carolyn Maloney introduced, HR 5244, the “Credit Cardholders Bill of Rights Act of 2007 as a result of careful study and analysis of the issue in various hearings over the past year.
Specifically this legislation would:
Offer cardholders the right to cancel their card when faced with a rate increase while paying off their existing balance at the rate they agreed to when they borrowed it.- Protect cardholders from arbitrary rate increases for reasons unrelated to whether they have paid their bills on time by barring issuers from applying such rate increases retroactively to existing balances. This would eliminate the incentive for issuers to arbitrarily raise rates based on reasons unrelated to the customer’s performance on the account, where those reasons don’t justify the rate hike
- Ban collection of interest on amounts already paid
- Require issuers to allocate a cardholder’s payment between their balances, where cardholders have balances at different rates
- Stop issuers from using “prime rate”, “fixed rate” and similar terms in a deceptive way by setting a single definition of such terms.
- Require that payments bade before 5pm EST on the due date by considered on time and be credited that day.
- Require that, for cards whose total fixed fees over a year exceed 25 percent of the credit limit, all fees for the year be paid up front, before the card is issued.
To read the text of bill, please click here.
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