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Credit Cardholders' Bill of Rights Will Help Protect Consumers

January 6, 2010
Opinion-Editorial

I am pleased to report a major victory for consumers. Last month, with my strong support, the House passed the Credit Cardholders’ Bill of Rights Act with a strong bipartisan majority.

This legislation will end the unfair and deceptive practices of the credit card industry and protect consumers from the abusive tactics that have driven and continue to drive so many Americans deeper and deeper into debt.

The Credit Cardholders’ Bill of Rights will ban most retroactive interest rate hikes on existing balances (except when payments are more than 60 days late), double-cycle billing, and due date gimmicks. The bill protects cardholders against arbitrary interest rate increases, empowers them to set limits on their credit that the credit card companies cannot exceed without the customer’s consent, and requires the card companies to allocate payments to pay-off first the debt that bears the highest interest rate. It prohibits charging fees just to pay a bill by phone, or charging over-the-limit fees unless a consumer opts-in in advance. It also prohibits issuing credit cards to minors, unless the minor has the ability to pay, or has parental consent.

With the passage of this legislation, the people of the San Fernando Valley will no longer face arbitrary interest rate hikes at any time and for any reason, or unfair, incomprehensible credit card agreements that can be revised at will. The legislation also gives Americans the information and protections they need to make better decisions about their financial lives.

I am particularly pleased that this bill includes language that I have long pushed for, requiring the credit card companies to tell customers how long it will take them to pay off their credit card balance, and how much interest they will pay, if they make only the minimum monthly payment on their credit card balance. This language will also tell customers how much they would need to pay each month in order to pay off their credit card balance in three years. Seeing this information will help consumers to see the benefits of paying off credit card debt as quickly as they can and to understand the enormous costs of just making the minimum payment.

Congressman Brad Sherman, a senior member of the House Financial Services Committee, represents portions of the San Fernando Valley