Gordon Votes to Expedite Credit Cardholders Protections

November 5, 2009, WASHINGTON, D.C. – As many Middle Tennesseans have recently received notices that their credit card interest rates and minimum payments are being raised for no justifiable reason, Congressman Bart Gordon voted for bipartisan legislation that will accelerate critical reforms to protect consumers from abusive practices within the credit card industry.  The bill overwhelmingly passed the full U.S. House of Representatives by a vote of 331 to 92.

“I have heard from many Middle Tennesseans struggling with the current economic climate who have recently received notices that their interest rates are being raised for no reason whatsoever,” said Gordon.  “My credit card interest rates have gone up for no reason as well, and this bill will close the loophole immediately after the President signs it into law – credit card issuers with more than 2 million cards in circulation will be prohibited from continuing to take advantage of their cardholders.”

The Expedited CARD Reform for Consumers Act (H.R. 3639) moves the effective date of February 22, 2010 set by the Credit CARD Act (H.R. 627), which was signed into law on May 22 to limit unfair changes credit card companies can impose on cardholders.  Under the bill, credit card companies would only be able to raise interest rates on balances in specified circumstances, would have to provide a 45-day notice of an interest rate hike, and could not charge interest rates on balances already paid.  The Credit CARD Act also prohibited credit card companies from raising interest rates based solely on the cardholder’s history with other card issuers and required card companies to apply minimum payments to balances with the highest interest rates or to all balances equally. 

Gordon added, “To allow small credit providers to adjust to the changes, many of the provisions in the Credit CARD Act we passed in May were not set to go into effect until February, but it’s a loophole that major card companies have been taking advantage of.  The bill we passed will prevent the major credit card companies from raising interest rates and minimum payments without reason or imposing unfair fees sooner.”

The provisions in the original Credit CARD Act were developed after the Federal Reserve examined common business practices employed by credit card companies and determined many were "unfair," "deceptive," and "anti-competitive."