Washington, D.C. – The U.S. Senate has passed legislation to make credit card company practices more transparent and reasonable for consumers, prohibiting unfair tricks and traps that keep many Americans in a “sweatbox” of mounting debt.
The bill, H.R. 627, was based on the Credit Card Accountability Responsibility and Disclosure Act of 2009, which was sponsored by Senate Banking Committee Chairman Christopher Dodd (D-CT) and cosponsored by U.S. Senator Sheldon Whitehouse (D-RI).
“With the economy in recession and unemployment rates climbing, American consumers are relying more than ever on credit cards to make ends meet each month,” said Whitehouse, who has authored legislation and held several hearings on abusive credit practices. “These reforms will put working families, not big credit card companies, first.”
As passed yesterday by the Senate, H.R. 627 will restrict “any time, any reason” rate increases, limit credit card companies’ ability to sign up children under the age of 21, require that cardholders be given notice 45 days before any fee or rate increase, and prohibit interest charges on debt paid on time – a ban on so-called double-cycle billing. These new restrictions and others will go into effect nine months after President Obama signs the bill – which he asked be brought to his desk by Memorial Day.
During debate on the bill, Whitehouse secured a commitment from Chairman Dodd to explore the congressional repeal of a 1978 Supreme Court decision that prevents Rhode Island and other states from applying their own interest rate limits to their own citizens. Whitehouse is the author of S. 255, the Empowering States’ Right To Protect Consumers Act of 2009, which would restore to each state the ability to protect its citizens from lenders based in other states.
“While the bill we passed today will protect consumers from some of the worst abusive tactics employed by credit card lenders, we need to do more to protect them from the greatest hazard of all – high interest rates,” Whitehouse said. “I’m pleased that Chairman Dodd has agreed to examine restoring to the states the ability to enforce interest rate caps against credit card lenders.”
Whitehouse is also the sponsor of S. 257, the Consumer Credit Fairness Act (CCFA), which would disallow claims made in bankruptcy proceedings against consumers by creditors charging excessive interest rates and fees. He has chaired two hearings on abusive credit card practices, including a field hearing last December that brought a panel of noted national and local experts in lending and bankruptcy law to Rhode Island College. The Committee is now expected to vote on the latest version of that legislation tomorrow.
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