H.R. 5244 would amend the Truth in Lending Act to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan.
Detailed Summary
Credit Cardholders' Bill of Rights Act of 2008 - (Sec. 2) Amends the Truth in Lending Act to prohibit a creditor from increasing any annual percentage rate of interest (APR) applicable to the existing balance on an open end consumer credit card account unless specified conditions are met.
Prescribes the treatment of existing balances following a rate increase.
Allows a creditor to increase an APR on the existing credit card balance only if the increase is due solely to: (1) the operation of an index not under the creditor's control and available to the general public; (2) expiration of a promotional rate, or loss of a promotional rate for a reason specified in the account agreement (e.g., late payment); or (3) the consumer's minimum payment has not been received within 30 days after its due date.
Requires a 45-day advance notice of credit card account rate increases.
(Sec. 3) Prohibits imposition of a finance charge, with certain exceptions, upon a credit card account balance that is based on balances for days in billing cycles preceding the most recent billing cycle (double cycle billing).
Prohibits the imposition of a fee on an outstanding credit card balance, at the end of a billing period, that is attributable only to interest accrued during the preceding billing period on an outstanding balance fully repaid during that preceding billing period. Declares that any failure to make timely repayments of such a balance shall not constitute a default on the account.
Requires each periodic statement of account to provide the telephone number, Internet address, and Worldwide Web site at which the payoff balance may be requested.
Grants a consumer the right to reject a new credit card before the creditor notifies a consumer reporting agency of its corresponding account
Details mandatory pro rata payment allocations by a creditor where an outstanding balance accrues interest at two or more different APRs.
Sets forth special rules for accounts with promotional rate balances or deferred interest balances.
Prohibits a creditor from denying a cardholder a specified payment grace period if the cardholder takes advantage of a promotional rate balance or deferred interest rate balance.
Requires creditors to send a periodic credit card statement of account to the consumer at least 25 calendar days before the due date for the next payment on the outstanding balance.
(Sec. 4) Authorizes a consumer to opt-out of creditor authorization of over-the-limit transactions if fees are imposed.
Limits any imposition of an over-the-limit fee to once per billing cycle.
Prohibits imposition of any over-the-limit fee if the credit limit was exceeded due to a credit hold, unless the actual amount of the transaction for which the hold was placed would have resulted in the consumer's exceeding such credit limit.
(Sec. 5) Prescribes the contents of credit card price and availability information which the Board of Governors of the Federal Reserve System (Board) must collect and make public semiannually.
Requires the Board to report to Congress annually on estimates of the approximate, relative percentage of income derived by the credit card operations of depository institutions from designated sources, including interest rates and fees imposed upon cardholders.
(Sec. 6) Prescribes a standard for the initial issuance of subprime or "fee harvester" cards (accounts requiring first-year fee payments in excess of 25% of the total amount of credit authorized).
Prohibits payment of any such fees (other than late fees or over-the-limit fees) from the credit made available by the card.
(Sec. 7) Prohibits extensions of credit to consumers under age 18, unless they are emancipated under state law.
(Sec. 8) Requires the Board to prescribe regulations implementing this Act within six months after its enactment.
Expresses the sense of Congress, all the same, that no provision of this Act should impede the promulgation of final regulations under laws in effect on the day before the date of enactment. States that such regulations should: (1) be prescribed in final form on or before December 31, 2008; and (2) apply to credit card transactions after the 30-day period following issuance in final form.
Status of the Legislation
Latest Major Action: 10/2/2008: Referred to Senate committee. Status: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Points in Favor
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Points Against
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Visitor Comments
MN
April 28, 2008, 4:08pm (report abuse)Like it
CHRIS
May 3, 2008, 4:16pm (report abuse)MUCH NEEDED LEGISLATION
um ya
May 27, 2008, 3:03am (report abuse)ABOUT TIME!!!!!!! Now how can I make sure that I do all I can in my civic duty to make sure this legislation goes through instead of just typing these words?
CathyG
August 9, 2008, 5:35pm (report abuse)The rape, pillage, and burning of the middle class has got to stop. Our grandparents and great-grandparents didn't fight to leave corrupt Old World economies just to see their descendants turned into debt serfs by a venal, avaricious financial system, aided and abetted by corrupt congress critters.
pt
August 13, 2008, 10:24pm (report abuse)Needs the addition of protection against "repeat arbitration bias" practices used by Credit Card Companies. Had a case where totally ignored the the law in his ruling. A Judge later threw out the ruling.
FrankD
August 18, 2008, 7:57pm (report abuse)Let's see Senator Chris Dodd stop this bill in an election year.
Pat
September 7, 2008, 10:20pm (report abuse)Why don't we let consumers worry for themselves, and shop around if they need to, vs. having the federal government regulate everything? We are adults, afterall.
David
September 11, 2008, 10:19pm (report abuse)Re: Pat
Because, obviously THAT isn't working right now. If you would open your eyes you would see tons of people being taken advantage of. A economic system with some transparency and responsible regulation will work better than a Laissez-Faire hands off approach. Sorry to break it to you Pat... but 4.50$/Gas - record foreclosures, loopholes all over the stock trade, credit cards with 31.9% does not sound like a functioning free market. This hands off market has screwed everyone but the top 5% of the country... doesn't sound like democracy... sounds like Toryism to me. I run a business... I'm not some - have the government do everything for us type of guy. Seriously though, this market is failing us, change is needed... and that means regulation of out of control business. Yes, people need personal accountability, but so do corporations! It's to the point where companies can change the rules in the middle of the game. I don't know how any logical person could justify that!
Chutzpah
September 15, 2008, 12:40pm (report abuse)While this may be needed legislation, nobody forces anyone to acquire credit cards. I quit using them 20 years ago. My VISA debit card works just fine, with no late fees or interest payments.
Victor v
September 19, 2008, 9:49am (report abuse)not have the government regulate everyting??!! Like bailing out the loansharks that rape us for up to 30% interest?? The Mafia is a better option, and who dare say we are not forced to use credit? You must be rich, because I could not have had surgery without it. Wake up America, and get rid of GOP rapists hiding udner "free market," while they bail out the rich, and the crooked CEOs who get to keep tier $40 million homes.
farzi Goleh Berjis
September 21, 2008, 2:21pm (report abuse)About time. Let us see who is going to try to stop this?
Anthony R
September 22, 2008, 6:53am (report abuse)While we mature adults may not need this type of legislation , the young do. Credit card companies prey on the college students, who are given cedit cards before they even get a job. Like a drug dealer to a young child, get them hooked nefore they get wise. Like mortgages should be, you should not get one if you can't afford it.
Danny
September 22, 2008, 10:40am (report abuse)Some people are in trouble because they don't pay attention to the agreements they make when they get a credit card or a loan. Get a credit card from a decent company. I have a very low IR on my capital one card and have never had a problem. Quit spending money on things you can't afford just because you have a credit card. Use it for things you actually need. Most of the current problems are caused by the government trying to regulate. More often then not regulations benefit the "crooked CEOs" they were made to stop and hurt honest businesses. They make competition very difficult. And Federal Insurance and bailouts causes banks to make too many questionable loans. The system is not working because of government intervention.
Philip
September 22, 2008, 2:37pm (report abuse)9/22/08 If you want to see this pass it's coming up for a vote. Consumers Union is sponsoring a call-your-rep campaign to counter bank lobbying pressure to sink the bill. See http://cu.convio.net/site/PageServer?pagename=cell_Patchthrucall_092108
or just call 1-800-977-1914
Let's see if Bush has the chutzpah to veto it in light of the current banks-gone-wild fiasco.
Larry
September 22, 2008, 2:51pm (report abuse)Hey Danny, this is not a matter of people not paying attention or being spendthrifts. This is a matter of sharp business practices calculated to ensare consumers who make a misstep. The fees, penalties and unilateral contract boobytraps written into a mountain of boilerplate effectively amount to a massive fraud by some credit card issuers. For example, a recent court case about the binding arbitration clause of most credit card agreements showed that the arbitrators were loath to find against the companies, like 99% in favor of them, even in clear cases, because the company pays their arbitration fees. Kangaroo courts. Penalties are profit centers. This is not about government regulation coddling us versus the free market, this is about basic laws requiring good faith, honesty and fair dealing. The practices of some of these issuers have degenerated over the years into nothing less than racketeering for astronomical profits. Honest banks have nothing to fear from this law.
Martin
September 22, 2008, 6:10pm (report abuse)So the federal government, that spends trillions of dollars it doesn't have, is going to lay out acceptable credit practices...
These idiots are going to drive me to a padded room someday. I just know it.
Jen
September 23, 2008, 11:22am (report abuse)See where the GOP deregulation has gotten us!!! Oh wait it's going to be another one of those things they blame on the democrats! All I know is that my family was a lot better off 8 years ago than it is today. Clinton left office with a stable economy and a surplus and the republicans ran it into a record deficit. and the snowball just keeps rolling......
Katee
September 23, 2008, 5:09pm (report abuse)This needs some work. This legislation, if it passes as is, will simply lead to everyone having a higher interest rate and no more introductory 0% rates. And I know many people live on those 0% interest rates to get by without interest in a short period of time of hardship. Some of the items in the legislation are good, but a lot need to go. Also, I agree that people need to start taking responsibility for they’re spending. I am not rich, not in the “top 5%” or even in the upper or middle of middle class. However, I also give up “frivolous” purchases to buy gas and food, unlike many of my friends (like one who just got back from a cruise and is complaining about not being able to pay her electric bill). If you chose to use your credit cards (which are basically a 20-30 day interest-free loan) to spend more than you have, then you will have to pay interest on that money and you accepted that responsibility when you signed for it.
Brian
September 27, 2008, 1:00am (report abuse)My wife and I are responsible users of credit.. doesn't matter. The credit card companies engage in unethical business practices. Washington Mutual states our very first payment on a 0% transfer balance was received untimely. We sent the payment two weeks in advance but somehow was no where to be found. Since that payment, our interest rate rose to 31.9%. Ironically, no other payment have been received untimely and WAMU is unwilling to to lower the rate. We strongly approve of legislation to curb the unethical practices of credit card companies. Stay away from WAMU CC
Mr. T
September 29, 2008, 6:02am (report abuse)Anyone a Wamu credit card holder?
If the FDIC bought out Wamu, for how much? How much did the FDIC sell to JP Morgan? The Federal Post Office can't make a profit. Did the FDIC make a profit on this Chase deal?
I believe if Wamu was bought out and closed by the FDIC, then the FDIC must have paid off my credit card balance and closed my account. The credit card company's rape us... It's Time for a little pay back. If your a Wamu credit card holder... spread the word. Our Wamu Accounts are Closed, and we don't owe a damn thing. The feds bailed us out to.
ChuckL
October 2, 2008, 2:30pm (report abuse)Victor,
I hate to be the one to tell you, but the Democrats have been the party of big business for about 15 years now.
Robert Kavanaugh
October 2, 2008, 9:33pm (report abuse)My ONLY problem is that there will be no RETROACTIVE reimbursements for these unilateral modifications to consumer's credit card contracts. Secondly, the bill doesn't really take effect until a year after passage. I would like the GAO to estimate the amounts stolen through the use of these dirty tricks. I believe the Senate should levy a 100% tax against these improperly modified contracts. I would like to see consumers granted tax credits for for amounts improperly converted from principal to interest through the use of these dirty tricks. That way, the bad guys contribute to the bailout. The victims, who have already paid far more than their share to the corrupted banking industry, would not have to pay their taxes which will end up being used to bailout the banking industry
Greg Howard
October 3, 2008, 4:17pm (report abuse)Oct 3 4:00PM
So has the Credit Card Holders Bill of Rights passed ?
It is about time the Feds put a stop to those thieves. I, Like "Brian" who wrote here have been cheated when I always pay on time and am a responsible user of credit with a good FICO.
I'd like to see more tranparency about the all important FICO and the three companies that self regualte it.
TomH
October 9, 2008, 2:06pm (report abuse)The biggest inequity to be corrected by the bill, a ban on universal default, is not mentioned in the last version. I hope that it has not been dropped. A lot of people do not understand what universal default is all about. Let's just say that if you have a problem with a bad bill and a collection agency reports you as in default that your credit card companies can apply the default clauses in your contract to increase your interest rate. Respectable lenders do not do this or say that it can be corrected by calling customer service. Try it sometime!
Bill
October 15, 2008, 6:16pm (report abuse)While I generally prefer government to stay out of my life, this is an exception. CC companies make changes, including lowering limits, in order to change your utilization ration and thus shove people into a higher risk catagory and justify raising the interest rates. The idea is to push people to just short of the financial brink and get us to where we can JUST afford the minimum payments. I had that problem recently so I'm stepping up working overtime to pay off the cards that arbitrarily raised rates.
Liz
October 22, 2008, 5:34pm (report abuse)Interesting few months - a "Sovereign" card (FIA)sent out notification of increased interest rates (from 7.9% to 20%)but allowed you to opt out >> result was I can keep the 7.9% rate but can never use the card. Then came "Discover" card - accepted an offer of a low rate for balance transfer "until balance is paid". Terms included a 2% balance payment fee, however notification was issued several months later that that would change to 4% (double the payment I signed up for). Last week (Oct. '08) came the "United" card (Chase) notification of increasing rates which allowed "Opt Out" >> problem is, if you do, "your account will be closed" and "any miles or rewards points you have EARNED may be forfeited" >> can't anyone do something???!!!
AB
November 14, 2008, 1:44pm (report abuse)For Danny... I have a very low IR on my capital one card also and I pay the balance off each month. I also believe in living within your means and not occurring excessive debt. But I disagree we you on the need for government regulations for these reasons. For the past 8 years there has been less government regulations in how corporate American conducts itself. Corporate American has had a free hand and now look at the results. Fortune 100 Banks, Brokerage and Insurance companies are failing or on the verge of failing. It wasn’t government regulations that caused banks to make those questionable loans or Brokerage firms to create questionable real-estate stock equities or Insurance companies to invest in questionable real-estate stock equities, only their desire to make more money. Corporate greed, corruption, and lack of accountability caused this mess. Government regulations are now needed to make them accountable for their actions.
Jeannie
November 23, 2008, 12:36am (report abuse)It's about time!! The tactics or should I say the games these cc companies play are horrendous and they think they can get away with it...grrr. Oh, how about hanging up on you when you make a complaint? Am I the only one who gets this treatment?