Washington, DC - At a time when the Bush administration has proposed a massive bailout of Wall Street, Congressman Maurice Hinchey (D-NY) today helped pass a bill to protect individuals and families on Main Street who are facing unfair practices from the credit card industry. The Credit Cardholders' Bill of Rights, which passed by a vote of 312-112, provides crucial protections against unfair, yet common, credit card practices.
"For far too long, credit card companies have held the American people hostage with tricky rules and fine print gimmicks," Hinchey said. "With unexpected and unfair rate hikes that pile on interest, so many Americans feel as if they are drowning in credit card debt and have no hope of ever getting out. This bill institutes a series of protections that helps level the playing field by affording credit cardholders some basic rights that will help shield them from unfair practices. At a time when so many Americans are struggling to keep up with the rapidly increasing cost of living and uncertain employment, it is imperative that we relieve them of shifty rules and 'gotcha' tactics by credit card companies."
The Credit Cardholders’ Bill of Rights protects Americans by:
· Ending unfair, arbitrary interest rate increases, by requiring ample notice before rate hikes and permitting lenders to raise rates on existing balances only if minimum payments are more than 30 days late (except for increases caused by changes in stated variable and introductory offers).
· Ending penalties on cardholders who pay on time.
· Protecting consumers from due date gimmicks by requiring credit card companies to mail bills 25 days (instead of 14) before the due date.
· Ending the credit card practice of applying consumer payments to lower interest debt first.
Credit-card debt in the U.S. has reached a record high -- nearly $1 trillion. The average American household’s debt from credit cards has risen from $2,966 in 1990 to $9,840 in 2007. The debt crisis inundating so many Americans is partly the result of an industry with few regulations and little oversight. Consumers nationwide are facing excessive credit card fees, sky-high interest rates, and unfair, incomprehensible agreements that credit-card companies revise at will. In 2007, credit-card issuers imposed $18.1 billion in penalty fees on families carrying credit card balances -- up more than 50 percent since 2003 and accounting for nearly half of the $40.7 billion in industry profits. This year, credit card companies will break all records for late fees, over-limit charges, and other penalties, pulling in more than $19 billion.
Earlier this year, Hinchey introduced the Fair and Justifiable Credit Card Interest Rate Act of 2008, which would put a maximum cap of 20 percent on the interest rate that credit card companies can charge consumers.
