Credit Cardholders' Bill Of Rights -- Cosponsored By Sherman -- Passes House

Washington, D.C. - Today, Congressman Brad Sherman (D-CA), a senior member of the House Financial Services Committee, voted to protect consumers from unfair and deceptive credit card practices by supporting the Credit Cardholders’ Bill of Rights Act. The legislation passed the House by a vote of 361 to 64, and will now go to President Obama who is expected to sign it this week.

As a cosponsor of this legislation for several years, Sherman has long championed the Credit Cardholders’ Bill of Rights Act, which 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.

Sherman said, “The people of the San Fernando Valley should not face excessive fees, or arbitrary interest rate hikes at any time and for any reason, or unfair, incomprehensible credit card agreements that are revised at will. This legislation will reign in these excesses and injustices.”

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 also 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.

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 that will require 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 account. 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,” said Congressman Sherman. “Seeing this information will help consumers to see the benefits of paying-off credit card debt as quickly as they can, and to see the enormous costs of just making the minimum payment.”