Credit card debt in the US has reached a record high of nearly $1 trillion, averaging $9,840 per household. With the economy slowing, costs of daily living and unemployment rising, growing numbers of cardholders are unable to keep up with their payments and are being taken advantage of by an industry with few regulations and little oversight. In 2007, credit card issuers imposed $18.1 billion in penalty fees on families carrying credit card balances–up more than 50% since 2003 and accounting for nearly half of the $40.7 billion in credit-card industry profits. While credit card companies will pull in more than $19 billion this years from late fees, over-limit charges, and other penalties, consumers nationwide are facing excessive credit card fees, sky-high interest rates, and unfair, incomprehensible agreements that credit card companies revise at will.
This afternoon, the House passed HR 5244, the Credit Cardholders' Bill of Rights, to provide crucial protections against unfair, but all too common, credit card practices:
Ends 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)
Ends penalties on cardholders who pay on time, like charging interest on already repaid debt
Protects consumers from due date gimmicks by requiring credit card companies to mail bills 25 days (instead of 14) before the due date
Ends the credit card practice of applying consumer payments to lower interest debt first
Learn more about the Credit Cardholders' Bill of Rights>>
Rep. Maloney:
“Credit cards are an essential part of our economy, but for too long card issuers have been allowed to do whatever they want, any time, for any reason. A deal is a deal, but what sort of deal is it when one side gets to make all the decisions? This bill will get credit card practices back to basic principles of contractual fairness.”
Chairman Frank:
“The notion that we, the elected Representatives, should defer to the Federal Reserve not on monetary policy, but on a public policy matter involving what constitutes fairness with credit cards…it’s not an argument I’ve often heard on that side. I understand there’s nothing in the Constitution or the Rules of the House that requires consistency – but I would hope we would at least note there’s an element of convenience of the invocation of this argument at this point, 'Let’s defer to the Federal Reserve.' No, let’s exercise the powers given to us under the Constitution.”
Rep. Ellison:
“About 8,000 dollars worth of credit card debt is what Americans are holding on average, for people who have a revolving balance. That is a burden people cannot sustain. The fact is, we would not be in this situation if we'd had the active regulation that Americans expect from their government.”