U.S. REP. GABRIELLE GIFFORDS JOINS BIPARTISAN MAJORITY TO PASS CREDIT CARDHOLDERS’ BILL OF RIGHTS

Legislation protects consumers by leveling the playing field between cardholders and card providers

WASHINGTON – U.S. Rep. Gabrielle Giffords today joined a bipartisan majority in the House of Representatives to pass the legislation that will protect credit cardholders from arbitrary rate increases, late fees and other unfair practices by card providers.

The House passed the Credit Cardholders’ Bill of Rights in a 357 to 55 vote. Giffords was a co-sponsor of the bill.

The Credit Cardholders’ Bill of Rights, which now goes to the Senate, is supported by numerous groups, such as AARP and the National Federation of Independent Businesses. President Obama has indicated he will sign the bill into law.

“Credit cardholders throughout Arizona and across our country have been taken advantage of for far too long,” said Giffords. “Those days are coming to an end. The Credit Cardholders’ Bill of Rights helps consumers by leveling the playing field between cardholders and card providers.”

Passage of the bill comes as an increasing number of Americans are relying on credit cards to help them through tough economic times. According to the Federal Reserve, credit card debt increased by 25 percent over the past decade, reaching $963 billion as of January. Seventy-eight percent of American families have a credit card and the average card balance was $7,300 in 2007, the most recent year for which numbers are available.

In supporting the bill, Giffords and other members of the House noted that credit card providers collect an estimated $15 billion annually in penalties and one-fifth of credit cardholders are charged interest rates above 20 percent.

“You don’t need an MBA to figure out that something needs to be done,” she said.

The Credit Cardholders’ Bill of Rights:

• Prevents card companies from unfairly increasing interest rates on existing card balances.
• Permits retroactive interest rate increases only if a cardholder is more than 30 days late, if a promotional rate expires, if the rate adjusts as part of a variable rate, or if the cardholder fails to comply with a workout agreement.
• Requires card companies to give a 45 day notice of all interest rate increases or significant contract changes.
• Requires companies to let consumers set their own fixed credit limit that cannot be exceeded.
• Ends unfair “double cycle” billing – card companies couldn’t charge interest on debt consumers have already paid on time.
• Prevents card companies from piling additional fees on balances consisting solely of left-over interest if a cardholder pays on time and in full.
• Prohibits card companies from charging a fee when customers pay their bill.
• Requires payments made in excess of the minimum to be allocated proportionally or to the balance with the highest interest rate.
• Requires card companies to mail billing statements 21 calendar days before the due date (up from the current 14 days), and to credit as “on time” payments made before 5 p.m. local time on the due date.
• Extends due date to next business day for mailed payments when the due date falls on a day a card company does not accept or receive mail.
• Establishes standard definitions of terms like “fixed rate” and “prime rate” so companies can’t mislead or deceive consumers in marketing and advertising.
• Gives consumers who are pre-approved for a card the right to reject that card prior to activation without negatively affecting their credit scores.
• Prohibits card companies from knowingly issuing cards to individuals under 18.
• Requires reports to Congress by the Federal Reserve on credit card industry practices to enhance congressional oversight.
• Requires card companies to send out 45-day notice of interest rate increases 90-days after the bill is signed into law; the remainder of the bill takes effect 12 months after enactment.