New Legislation Could Impact Your Credit Card

Hi All,

Evidently last years efforts by congress to address abuses in the credit card industry didn’t do the trick. Now the consumerist is reporting that the House of Representatives is considering a proposed credit card holder’s “bill of rights”. While a lot of what comes out of congress is fluff, this legislation is important for the average joe because it would limit some of the worst practices in the industry. Basically it would do the following:

1) Ban arbitrary rate increases, double-cycle billing and lending to subprime borrowers
2) Force creditors to provide 45 days notice of any rate increase
3) Empower cardholders to set limits on available credit and ban over-the-limit fees once that ceiling is reached
4) Require creditors to mail bills at least 25 days before the due date, instead of 14 days as currently required
5) Require creditors to apply payments first towards high interest items
6) Prohibit “fee harvesting cards”

The legislation is controversial. On the one hand, card companies should have the ability to charge more to higher risk borrowers, this is how markets work. The other hand, the business practices of many of card issuers are predatory. This is especially the case with fee harvester cards. And, after all isn’t it congress’s job to protect Americans from being ripped off?

Controversy aside, the bottom line is: for card holders, this bill will likely level the playing field between you and your lender. So it makes sense to pay attention.

For more on the story, check the Consumerist and the Library of Congress’ webpage.

Best,

James