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Credit Card "bill of rights" passed in House; through Gutierrez subcommittee.

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WASHINGTON--The House approved Thursday a credit card "bill of rights" sponsored by Rep. Carolyn Maloney (D-N.Y.) and steered through Congress by Rep. Luis Gutierrez (D-Ill.), Chairman of the Financial Services' Subcommittee on Financial Institutions and Consumer Credit. Last week, President Obama called credit card company executives to the White House.

Obama said, "I will work with Congress in the weeks to come so that I can sign a credit card reform bill into law that upholds these principles and upholds the interests of the American people."

On other consumer credit issues, Sen. Dick Durbin (D-Ill.), over at PoliticsDaily.com talked to me about the need for consumers to have a 36 percent cap on credit card interest and the need for a Financial Products Safety Commission.

Below, Gutierrez release.....followed by Obama statement

(Washington DC) Today, Congressman Luis V. Gutierrez (D-IL), Chairman of the Financial Services' Subcommittee on Financial Institutions and Consumer Credit, led the House of Representatives in passing H.R. 627, Credit Cardholders' Bill of Rights Act by a vote of 357 - 70. Introduced by Rep. Carolyn Maloney (D-NY), this legislation would level the playing field between card issuers and cardholders by applying common-sense regulations to ban retroactive interest rate hikes on existing balances, double-cycle billing, and due-date gimmicks. It would also improve the advance notice of impending rate hikes, giving cardholders the information they need and rights to make decisions about their financial lives.

"With more than 640 million credit cards in circulation that account for an estimated $1.5 trillion of consumer spending, the U.S. economy has clearly gone plastic," said Rep, Gutierrez. "But America's love affair with credit cards comes with a hefty price. The average credit card debt among American households has more than doubled over the past decade. Today, the average family owes roughly $8,000 on their credit cards. Meanwhile, as Americans struggle to make ends meet, a growing share of the industry's revenues come from deceptive tactics, such as universal default terms spelled out in fine print -- the terms and conditions of which can be changed at any time for any reason with 15 days' notice or less. That is unacceptable."

According to a recent Pew study, 100 percent of the 400 types of credit cards reviewed contained in its terms at least one of the practices that have been found by the Federal Reserve to be unfair and deceptive. And 93 percent of the cards studied by Pew allowed for any-time, any-reason repricing, allowing an issuer to hike up the APR on a consumer's credit card even if they've never missed a payment.

"The Credit Card Holders Bill of Rights represents an important step towards rebuilding the economy in a way that's consistent with American values: rewarding hard work and responsibility instead of high-flying finance schemes," said Rep. Gutierrez. "In the last several months, Congress has devoted significant attention to getting banks lending again. Now it's time to shift our focus back to the consumers who are struggling through this recession."

In 2008, credit-card issuers imposed $19 billion in penalty fees on families with credit cards, and this year card companies are expected to break all records for late fees, over-limit charges, and other penalties, pulling in more than $20.5 billion. Credit-card debt in the U.S. has reached a record high --nearly $1 trillion -- and almost half of American families currently carry a balance. One-fifth of those carrying credit-card debt pay an interest rate above 20 percent.

In addition to applying common-sense regulations that would ban retroactive interest rate hikes on existing balances, double-cycle billing, and due-date gimmicks, the legislation responds to this crisis by writing into law recently proposed Federal Reserve Board regulations. Furthermore, it outlaws credit cards to minors under age 18, bans credit card companies from imposing fees when customers pay their bill, and allows customers set a lower credit card limit.

Rep. Gutierrez also introduced an amendment to the bill to addresses how credit card companies allocate payments when a consumer is carrying balances on his or her credit cards at several different interest rates. Under existing law, when different portions of a consumer's credit card balance have different interest rates, the credit card issuer may allocate payments in excess of the minimum payment in any manner it chooses. Many issuers allocate these excess payments to the portion of the balance with the lowest interest rate, ensuring that the high interest portions remain on the debtor's account longer. Rep. Gutierrez' amendment would prevent the card issuers from abusing the introductory rates they offer by allocating payments to the lowest rate balance first while the industry makes their profits from keeping the higher interest rate balances on the consumer's account, which is common practice today.

###

THE WHITE HOUSE
Office of the Press Secretary
__________________________________________________________________________________________________________________
FOR IMMEDIATE RELEASE
April 30, 2009

STATEMENT FROM THE PRESIDENT PRAISING HOUSE PASSAGE OF H.R.627, THE CREDIT CARDHOLDERS' BILL OF RIGHTS

Today, under the leadership of Representatives Barney Frank, Carolyn Maloney, and Luis Gutierrez, members of both parties in the House of Representatives came together to protect American consumers, paving the way toward real, meaningful credit card reform. While Americans have a responsibility to live within their means and pay what they owe, credit card companies have a responsibility to set rules that are fair and transparent. The principles I have long supported would help ensure that these responsibilities are met: strong and reliable consumer protections; credit card forms and statements that have plain language in plain sight; tools that can help people make an informed choice about what credit card to use; and beefed up monitoring, enforcement, and penalties. And building on what we have achieved today, I will work with Congress in the weeks to come so that I can sign a credit card reform bill into law that upholds these principles and upholds the interests of the American people.


##


STATEMENT OF ADMINISTRATION POLICY
H.R. 627 - Credit Cardholders' Bill of Rights Act of 2009
(Rep. Maloney (D) New York and 128 cosponsors)

The Administration strongly supports House passage of H.R. 627. The Board of Governors of the Federal Reserve System, the Office of Thrift Supervision, and the National Credit Union Administration have issued new rules that prohibit unfair credit card practices. The Administration supports Congress's efforts to codify these changes and provide additional strong and reliable protections for consumers that ban unfair and abusive practices. The Nation's credit card system must have more accountability, including more effective oversight and more effective enforcement of credit card issuers who violate the law. Consumers need to be informed about the consequences of their financial decisions and statements issued by credit card companies need to be written in plain language and be in plain sight. Credit card companies must be required to make their contract terms easily accessible online in a fashion that allows consumers to easily choose the deal that best meets their needs. Moreover, every credit card issuer ought to provide consumers with a card option that has simple terms and is presented with transparent pricing and in language that is easy to understand. The Administration applauds the efforts of leaders in the House in moving this legislation forward, including the sponsor of H.R. 627 and the chairs of the Financial Services Committee and its Financial Institutions and Consumer Credit Subcommittee. The Administration looks forward to working further with Congress on this important issue as H.R. 627 moves through the legislative process.

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18 Comments

Whatever!

The main issue for most problem accounts --a lower APR% ---isn't addressed! Dick Durbin says the cap needs to be 36%APR?!?!??!?! The people who are stuck and hurting and enduring all of the "tricky-dick" moves from the credit card industry are people who have high APR! And what rules are in play don't happen until a year from now! What will the banks make this year? 25 billion?!?!

And on top of that, those consumers who were bilked don't get any retroactive perks . In other words, if you're stuck today, your APR won't go down to its previous level when your were shafted -- this should be called the "sucks to be you, banks rule bill"

ps. ---36%?! Try capping at 18%. These two bit hustlers saying this bill is for consumers comes after the fact that the great majority of them enable these credit industry bandits! What a load of bunk. Hustled once again.

I see nothing mentioned about the practice credit card companies impose on late payments - such as popping the interest rate to around 30% on all cards, if only one unrelated credit account is late. I heard the president specifically mention he wanted that practice stopped. I am elderly, and it could be possible that at some time I might overlook a payment. That would allow all my credit cards to be increased to the max. It seems preditory on their part - just waiting for one to slip up.

Pay your bill and you don't have to worry. If you can't afford late payments or a jacked up APR, then either get rid of the card, don't get the card in the first place, or DONT PAY LATE OR GO OVER YOUR LIMIT!

More meddling from the Nanny State. Nobody held a gun to your head and made you borrow the money. Stop whining, pay your bills and start acting like a grown up.

Here's a fun fact. Did you know that there are people who are paid to find articles like this and post things similar to Morgan's post above?

I'm not saying that Morgan is a shill, but there really is an effort made by companies and institutions with questionable policies to persuade consumers that what they are doing is fair game. I know someone who does it as part of his job.

I'm very happy that this is being passed. It's too late to save me from bankruptcy (the best thing I ever did) but it looks like it will prevent at least some of the underhanded tactics that landed me there for people in the future.

Morgan, I hope you never have to deal with the issues that this bill addresses. Paying late and going over your limit aren't the only ways you can end up in debt slavery.

It's not true that paying your bills on time is enough. Bank of America Visa, which I've had for five years without being late on a payment, doubled the interest rate on my card simply because the balance was approaching the limit. Three years earlier, the same account had been automatically expanded to double the limit when the balance approached the ceiling. Go figure...
The worst part is that the rate hike notice didn't come until after the threshold so I didn't even know until after it happened. The consumer credit crisis is not simply a matter of poor personal responsibility. The companies are clearly exploiting consumers so long as the government, who they help to put in office, lets them get away with it.

I am not at all impressed with Congressman Luis V. Gutierrez (D-IL), Chairman of the Financial Services' Subcommittee on Financial Institutions and Consumer Credit, passing H.R. 627, Credit Cardholders' Bill of Rights Act introduced by Rep. Carolyn Maloney (D-NY) these same people knew about the need for "common-sense regulations to ban retroactive interest rate hikes on existing balances, double-cycle billing, and due-date gimmicks" and allowed it to continue.

Why would you place a 36 percent cap on credit card interest? Considering the above statement 36% is to high, saving account interest earnings are less than 10%, Home Loans are less that 25%, Student loans and car loan are not allow to charge those high rates--this is legalized loan sharking-- why should credit card companies be allotted such a enormous rates.

"...this legislation would level the playing field between card issuers and cardholders by applying common-sense regulations to ban retroactive interest rate hikes on existing balances, double-cycle billing, and due-date gimmicks..."

Why have this been allowed so long?

How will this assist the current victims?

"It would also improve the advance notice of impending rate hikes, giving cardholders the information they need and rights to make decisions about their financial lives."

This is just a statement the credit card company give advance notices all along it is up to us as consumer to read. And, answer question if we do not understand the financial language.

As Americans struggle to make ends meet, a growing share of the industry's revenues come from deceptive tactics, such as universal default terms spelled out in fine print -- the terms and conditions of which can be changed at any time for any reason with 15 days' notice or less. That is unacceptable."

When did this become unacceptable? This year. Why was it allowed to be established?


Where are the "Financial Institutions that have the interest of the consumer at heart.

Is this it? These new regulations do not address the usurous double digit interest rates. The question regulators need to ask themselves is "Can a cardholder who is in credit card debt, providing no more purchases are made and payments are made on time, eventually be able to pay off the debt"? The intent of credit card companies in imposing these double-digit interest rates is to PREVENT the cardholder from paying off the debt. These regulations address only deceptive and predatory practices so rediculously crimnal that any other industrialized nation would invoke sentences imprisoning it's violators. These new regulations look like they were gdrafted by banking industry lobbyists.

Banks have huge debts, but they're getting a helping hand from the federal government. If you have overwhelming debt--perhaps from bad investments, or maybe a job loss, a medical crisis or just plain overspending--you're probably on your own. Check the website http://24hrbreakingnews.blogspot.com/2009/04/credit-counseling-service.html">http://24hrbreakingnews.blogspot.com">http://24hrbreakingnews.blogspot.com'>http://24hrbreakingnews.blogspot.com/2009/04/credit-counseling-service.html">http://24hrbreakingnews.blogspot.com to see if they can help. I was also in trouble and I am glad I did check it before I talk to my CC company and it helped - Jane Jim, California

Rising APR's are a sign of the times, the more defaults the issuers face and the more deadbeats who don't pay their bills the more APR's have to rise to cover the cost.

The more riskier you are the higher your APR - YES even if you have never missed a payment.

You want to know who is really raising your rate - it is the guy next door who spent too much irresponsibly and now can't pay his bills.

You know a great way not to pay ANY interest? Charge ONLY what you know you can pay off at the end of the month and stop looking for a free loan that you don't deserve!

Capping at 36% is way too high. 18-19% would be doable, but barely. If we, as credit card holders, could pay off cards every month, well, we would not need credit cards! Even when you pay monthly you are penalized - because you might be one day (1!!!)late. 35-39.00 dollar penalties. This is totally crazy!! And way out of hand.

I just hope this is not a big over reaction. Credit cards are financial tools to be used in moderation. If you don't like them, don't use them!

Are we bailing out banks and then forcing them to reduce their profits? Seems like we should be helping them raise prices so we can be sure they dont go under....

Are we bailing out banks and then forcing them to reduce their profits? Seems like we should be helping them raise prices so we can be sure they dont go under....

what about the trickery with the over the limit fee crap, I went over 2 dollars and was chanrged $39.00 for it, those sneaky little retarts deserve to be jailed!

I had excellent credit after my divorce until my ex stopped sending the child support payments after he found out I was dating someone else. Without the extra income, I couldn't make the credit card payments that added up during the divorce when he refused to pay me anything at that time and it caused my 6.99% interest rate to go up to 29.99%.
That was the first time in 7 YEARS that I was ever late on a payment. It's not fair and now I'm stuck paying these ridiculous minimum payments that can only get paid when my ex decides to yo-yo pay his child support.
I am well aware that credit card debt is our own fault but most Americans only have nice homes, cars, etc. because of credit and when money is needed, credit is good to have. Mortgage companies and bank loans can't raise their interest like card companies, so every credit issuer needs to operate the same way. Maybe then credit card folks will be more cautious who they give their money to.

they say they will have to increase rates across the board for card holders. yes, they will so they can protect their bonuces. if they up rates 1% they should take a 3%+ pay cut on their salery and a 6%+ on their bonuses that is what they are trying too protect their personal bottom line. they should have been stopped along time ago! turn it around on them. their tacktics have hurt so many for so long, turn it around on them let them know how it feels to be gouged. any credit card company with a card banks name or backed by a bank that took a gov bail out should be treated like we are and pay for 7 years like we are. they need to be treated like they treat the way they treat their card holders. they need too scale back as we have too

It will sure be great if Durbin can get the Federal Government to limit the maximum price that consumer loan companies can charge customers. I don't care if these loan companies have to charge that much to make money - let them fail for all we care. And I don't care that there are already state laws regulating these things - we need to abolish the state laws and make Federal law rule everything anyway. And I don't care that these consumers don't have to borrow the money under terms they don't like if they want to. We need to punish everyone that makes money when there are poor people in this country. And who needs these consumer loan companies anyway? Obama and Durbin will give us what we need.

But we shouldn't stop with loan prices. Durbin should propose price limits on everything. It's ridiculous that grocery stores, movie theatres, airlines, clothing stores, ect. can just charge whatever price they think people will pay just to maximize their incomes. That's criminal! Durbin and Obama need to fix the maximum price any private business can charge on everything. Times are hard and working Americans are having a hard time - its time the government tells every private business owner the maximum price they can charge for the things we want. If those businesses don't like it, they can just fail! We don't care - do we?

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Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

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This page contains a single entry by Lynn Sweet published on April 30, 2009 5:44 PM.

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