Banking & Credit

Senate Panel to Consider Landmark Credit Card Bill: Consumer Groups Urge Support

 |  Press Release

WASHINGTON — As the Senate Banking Committee prepares to consider legislation that would curb predatory credit card lending practices on March 31, national consumer organizations today called on members of the committee to support the bill and to send it to the Senate floor for passage.

The Consumer Federation of America and Consumers Union said that S. 414, the Credit Card Accountability Responsibility and Disclosure (CARD) Act introduced by Chairman Chris Dodd and 18 co-sponsors, targets the most abusive practices used by credit card issuers.

The Federal Reserve Board issued rules to stop unfair credit card practices, giving the industry until July 1, 2010, to implement the new practices.  A number of major card issuers are now increasing fees and interest rates on millions of Americans before the new rules take effect.

Travis Plunkett, legislative director for the Consumer Federation of America, said, “Congress is taking a strong stand against the traps and tricks that many credit card companies use to increase their profits at the expense of financially vulnerable consumers.  We applaud Senator Dodd for introducing this important bill and urge the members of the Senate Banking Committee to vote for it.”

Pam Banks, senior attorney for Consumers Union, said, “This bill will put the force of law behind the Federal Reserve’s new rules, and will protect consumers by strengthening these reforms.  Credit card lenders are trying to take advantage of the fact that the Federal Reserve’s rules don’t go into effect until 2010 by maximizing short-term income from credit card interest payments, even if the consequences are harmful to their own customers.”

The “Credit CARD Act” requires credit card companies to stop:

  • Applying unfair interest rate hikes retroactively to balances incurred under the old rate; o Hitting consumers with high penalty fees that are not related to the costs that credit card companies incur.

Assessing hidden and unjustified interest charges on balances already paid off; o Piling on the debt that consumers owe by requiring them to pay off balances with lower interest rates before those with higher rates.