Wednesday, April 1
Posted 2 p.m.
Bankrate reporter Leslie McFadden contributed this entry.
Yesterday, the U.S. Senate Banking Committee approved a bill, a 12-11 vote, which would end egregious credit card practices. In February, committee Chairman Sen. Christopher Dodd, D-Conn., re-introduced the legislation, known as the Credit Card Accountability Responsibility and Disclosure Act, or Credit CARD Act.
The legislation would expand the credit card regulations approved in December, which don't take effect until July 2010. According to Sen. Dodd's official Web site, the Credit CARD Act would require 45 days' advance notice of interest rate hikes and would end arbitrary rate increases (universal default) and double-cycle billing. Issuers would face new limits on fees. They could not charge an overlimit fee more than once per billing cycle, impose a fee to make a payment or assess interest charges on fees. The bill would also prohibit issuers from granting credit cards to applicants under age 21 if they couldn't prove capacity to repay or completion of a certified financial literacy course.
The bill faced some opposition in the Senate panel and from industry groups, according to an article in The Wall Street Journal. The argument goes that it would restrict access to credit and increase costs for borrowers. To win over more backers, Dodd indicated that he's open to modifying the bill before the Senate votes on it.
Today a House Financial Services Subcommittee will mark up another bill aimed at credit card reform -- H.R. 627, the Credit Cardholders' Bill of Rights Act. Sponsored by Rep. Carolyn Maloney, D-N.Y., the legislation would end double-cycle billing, limit retroactive rate increases and allow consumers to set a hard credit limit that they couldn't exceed, among other protections.
We'll continue to cover these measures as they move along.
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