House of Representatives Sends "Credit Cardholders' Bill of Rights" to President's DeskMay 20, 2009

WASHINGTON, D.C. The House of Representatives today completed work on H.R. 627, the "Credit Cardholders' Bill of Rights," and sent the bill to the President where he is anticipated to sign the measure into law in the coming days. A bi-partisan coalition of Members voted 361-64 in favor of passage.

"Credit cards are an essential tool of the American financial system, but they must work to the benefit of both consumers and providers," said Congressman Lincoln Davis. "Some credit card companies have abused American families with exorbitant interest rates, unnecessary fees and deceptive marketing, and helped take our economy in the wrong direction."

Today's legislation bans most interest rate increases on existing balances and provides additional notice of interest rate hikes going forward on new purchases. It requires that bills be sent 21 days before the due date; prohibits charging fees just to pay a bill by phone, mail or web; bans over-the-limit fees unless a consumer opts-in in advance; bans due-date tricks; requires payments to be applied fairly to the highest interest rate balance first; and strengthens credit card protections for young people.

The Credit Cardholders' Bill of Rights requires many pro-consumer reforms, including:

• Requiring credit card companies to give 45 days notice of all interest rate increases or significant contract changes, which would go into effect 90 days after enactment of the legislation.
• Preventing credit card companies from arbitrarily increasing interest rates on existing card balances expect for cases when a promotional rate expires, the rate adjusts as part of a variable rate, or if the cardholder fails to comply with a workout agreement.
• Protecting cardholders from due date gimmicks by requiring card companies to mail billing statements 21 calendar days before the due date (up from the current 14 days), and to credit as "on time" payments made before 5 p.m. local time on the due date. It also extends due date to next business day for mailed payments when the due date falls on a day a card company does not accept or receive mail.
• Prohibiting companies from using misleading terms and damaging consumers' credit ratings by establishing standard definitions of terms like "fixed rate" and "prime rate" so companies can't mislead or deceive consumers in marketing and advertising.
• Barring card companies from charging to process payments. For instance, credit card issuers would not be able to charge extra if a consumer wants to pay by phone rather than by mail.

Congressman Davis has long been a champion for the rights of credit card holders. In the 110th Congress, then as a Member of the House Financial Services Committee, Congressman Davis sponsored H.R. 5280, the "Stop Unfair Practices in Credit Cards Act." A number of provisions in Congressman Davis's bill were included in today's legislation.

"This legislation is a win for consumers, and will help set our nation back on track towards economic stability," said Davis.