Washington, D.C.--The following is a statement from Rep. Eliot Engel (D-NY-17) regarding the implementation of the Credit Cardholders’ Bill of Rights, which becomes effective today (February 22, 2010).

“Most people in the country have multiple credit cards in their wallets and they have been subject to the frequent rate increases from credit card companies. These unfair rate increases and abusive fees have helped push too many families into downward financial spirals from which many have been unable to emerge.

“Today, the following becomes law:

• Prohibition of arbitrary interest rate increases and universal default on existing balances;
• Prohibition of over-limit fees charged by issuers, unless the cardholder permits the issuer to complete over-limit transactions. Such fees would be limited;
• Payments more than the minimum must be applied to the balance with the highest rate of interest;
• Elimination of early morning deadlines on payments;
• Eliminates interest charges on on-time payments, also known as the double-cycle billing ban;
• Requires cardholders under 21 to have a parent, guardian or other adult taking responsibility for the debt to sign the application;
• Protects holders of gift-cards by giving all gift cards at least a five-year life span.

“These new rules go along with the regulations already in place which provide written notice of any increases, notification to holders of their right to cancel the card before rate hikes, and three-week notice before payment due dates. On August 22, 2010, issuers will be required to keep penalty fees reasonable and proportional to the omission or violation, review all rate increases since January 2009 and reduce rates when warranted, and limit dormancy, inactivity and service fees on gift cards.

“The Credit CARD Act gives consumers badly-needed protections and helps them keep more of their hard-earned money in their pockets rather than being paid to credit card companies via hidden fees and exorbitant interest rates. All anyone asks for is fairness, and these regulations even the playing field enabling consumers to purchase more freely and the companies to still make their profits.”