Washington, D.C. - Rep. Berman announced that landmark reforms to the credit card industry will go into effect today thanks to the Credit CARD Act.  The law, which was passed by this Congress and signed by President Obama last year, will end unfair industry practices and protect consumers from abusive tactics like retroactive rate increases, misleading late fee charges and over-limit fee traps. 

“When so many American families are struggling to make ends meet, consumers deserve to be treated fairly by their credit card companies,” said Rep. Berman.  “That’s what this new law will do: level the playing field for consumers.”

The new law bans retroactive interest rate hikes on existing balances (except when payments are more than 60 days late), double-cycle billing and due-date gimmicks, and stops companies from charging over-the-limit fees unless the consumer opts in.  Consumers will save at least $10 billion a year from curbs on interest rate increases alone, according to the Pew Charitable Trust, which researches and tracks credit card issues.

The Credit CARD Act is part of Congressional Democrats' long-term plan to rebuild our economy in a way that works for middle-class families and rewards responsibility and hard work – not high-flying finance schemes.

“The people of California's 28th district work hard and play by the rules; they deserve fair treatment from their credit card companies. The Credit CARD Act gives Americans the information and rights they need to make smart, informed decisions about their financial lives,” explained Rep. Berman.

 

Specifically, the law increases notice of any rate hikes going forward on new purchases to 45 days, requires card companies to fairly credit and allocate payments, and prohibits charging fees just to pay a bill by phone. It also protects young consumers by requiring that before cards can be issued to anyone under 21, a parent must co-sign or the applicant must demonstrate an ability to pay.

 

“Our economic recovery depends on a shared prosperity,” said Rep. Berman. “That’s why House Democrats continue to side with middle-class families over a credit card industry that has profited through unfair, abusive practices.”

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