View Credit Cardholders' Bill of Rights Act of 2008 on OpenCongress.org

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The Credit Cardholders' Bill of Rights Act of 2008 (H.R. 5244) would have instituted a series of reforms of the credit card industry, including limits on when and how companies can increase interest rates, changes in billing practices, and the clarification of terms like "fixed rate" and "prime rate." It passed the House in September 2008 but did not come to a vote in the Senate.

money shop

Contents 1 Summary 2 Bill consideration 3 Support and Opposition 4 Related legislation 5 Articles and resources 5.1 See also 5.2 References 5.3 External resources 5.4 External articles

Summary

As summarized by the bill's main sponsor, Rep. Carolyn Maloney (D-NY), the bill would have done the following:

• Ends Unfair, Arbitrary Interest Rate Increases. ^[1]
  • Prevents card companies from unfairly increasing interest rates on existing card balances – retroactive increases are permitted only if a cardholder is more than 30 days late, if a pre-agreed promotional rate expires, or if the rate adjusts as part of a variable rate.
  • Requires card companies to give 45 days notice of all interest rate increases so consumers can pay off their balances and shop for a better deal.

Cash Loan

• Lets Consumers Set Hard Credit Limits, Stops Excessive “Over-the-Limit” Fees.^[1]
  • Requires companies to let consumers set their own fixed credit limit.
  • Prevents companies from charging “over-the-limit” fees when a cardholder has set a limit, or when a preauthorized credit “hold” pushes a consumer over their limit.
  • Limits (to 3) the number of over-the-limit fees companies can charge for the same transaction – some issuers now charge virtually unlimited fees for a single limit violation.

12 month loans

• Ends Unfair Penalties for Cardholders Who Pay on Time.^[1]
  • Ends unfair “double cycle” billing – card companies couldn’t charge interest on debt consumers have already paid on time.
  • If a cardholder pays on time and in full, the bill prevents card companies from piling additional fees on balances consisting solely of left-over interest.

payday loans

• Requires Fair Allocation of Consumer Payments.^[1]
  • Many companies credit payments to a cardholder’s lowest interest rate balances first, making it impossible for the consumer to pay off high-rate debt. The bill bans this practice, generally requiring payments to be allocated proportionally to balances that have different rates.

quickquid

• Protects Cardholders from Due Date Gimmicks.^[1]
  • Among other measures, requires card companies to mail billing statements 25 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.
• Prevents Companies from Using Misleading Terms and Damaging Consumers’ Credit Ratings.^[1]
  • Establishes standard definitions of terms like “fixed rate” and “prime rate” so companies can’t mislead or deceive consumers in marketing and advertising.
  • Gives consumers who are pre-approved for a card the right to reject that card prior to activation without negatively affecting their credit scores.
• Protects Vulnerable Consumers From High-Fee Subprime Credit Cards.^[1]
  • Prohibits issuers of subprime cards (where total yearly fixed fees exceed 25 percent of the credit limit) from charging those fees to the card itself. These cards are generally targeted to low-income consumers with weak credit histories.
• Bars Issuing Credit Cards to Vulnerable Minors^[1]
  • Prohibits card companies from knowingly issuing cards to individuals under 18 who are not emancipated minors.

Bill consideration

The bill was introduced in the House on February 7, 2008 and sponsored by Rep. Carolyn Maloney (D-NY) and 155 co-sponsors. It passed the House on September 23, 2008 by a vote of 312-112.^[2]

Same for all scorecards:

• Name of bill: Credit Cardholders' Bill of Rights Act of 2008
• Chamber: U.S. House of Representatives
• Roll call number: 623
• Congress number: 110th
• Session number: 2
• Vote link: U.S. House of Representatives record vote 623, 110th Congress, Session 2

Scored vote
Scorecard: Americans for Democratic Action 2008 House Scorecard	Org. position: Aye
Description: "Passage of a bill to prohibit most retroactively increasing interest rates on existing balances on credit cards, issuing finance charges on balances for days not included in the most recent billing cycle, charging fees on outstanding balances created only from interest accrued in the previous billing period until the end of the current bill period. The measure also would require companies to send statements at least 25 days before payment is due and give at least 45 days notice before increasing rates" (Original scorecard available at: http://www.adaction.org/pages/publications/voting-records.php)

Scored vote
Scorecard: Drum Major Institute 2008 House Scorecard	Org. position: Aye
Description: "Many middle-class Americans rely on credit cards to meet daily expenses. 80% of U.S. households have at least one credit card and 55% of households carried an outstanding balance in 2006. At the same time, middle-class households are constantly bombarded with misleading credit card offers even when they cannot afford to take on additional debt. Consumers have been slapped with excessive and obscure fees and interest charges that, if they are explained at all, are described in small text and confusing language. It is now common practice for credit card companies to apply finance charges twice in a billing cycle (double-cycle billing); to charge multiple over-the-limit fees; and to apply payments on balances with multiple interest rates to the balance with the lowest rate, all practices banned or restricted under this bill. The Credit Cardholders’ Bill of Rights Act ends the most insidious practices employed by credit card companies, protecting consumers from practices that can keep them mired in credit card debt despite their best efforts to dig themselves out." (Original scorecard available at: http://www.drummajorinstitute.org/library/report.php?ID=63)

Scored vote
Scorecard: National Journal 2008 House Scorecard	Org. position: Aye
Description: "Prohibit unfair practices by credit card issuers. September 23. (312-112)" (Original scorecard available at http://www.nationaljournal.com/njmagazine/cs_20090228_4813.php

The bill was referred to the Senate Committee on Banking, Housing, and Urban Affairs, but was never brought to a vote before the full Senate before the end of the 110th Congress.^[2]

Support and Opposition

Supporters of the bill included:^[3]

• Center for Responsible Lending
• Consumer Action
• Consumer Federation of America
• Consumers Union
• National Small Business Association
• Service Employees International Union (SEIU)
• U.S. Public Interest Research Groups

Opponents included:^[3]

• American Bankers Association
• American Express Company
• American Financial Services Association
• Citi Cards
• Consumer Bankers Association
• Discover Financial Services
• Financial Services Forum
• Financial Services Roundtable
• Independent Community Bankers of America
• National Association of Federal Credit Unions
• National Association of Manufacturers
• U.S. Chamber of Commerce

Related legislation

Rep. Carolyn Maloney (D-NY) has introduced similar legislation in the 111th Congress as the Credit Cardholders' Bill of Rights Act of 2009 (H.R. 627).

Articles and resources

See also

• H.R. 627 - Credit Cardholders' Bill of Rights Act of 2009, 111th Congress at OpenCongress.

References

1. ↑ ^{1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7} Summary of the Credit Cardholders’ Bill of Rights, Office of Rep. Carolyn Maloney (D-NY).
2. ↑ ^2.0 2.1 OpenCongress' info page on H.R. 5244.
3. ↑ ^3.0 3.1 MAPLight.org's info page on H.R.5244 - Credit Cardholders' Bill of Rights Act of 2008.

External resources

• H.R.5244, 110th Congress, at THOMAS.
• Credit Cardholder's Bill of Rights: Leveling the Playing Field at Rep. Carolyn Maloney's (D-NY) House Web site.
• H.R.5244 - Credit Cardholders' Bill of Rights Act of 2008 at MAPLight.org.

External articles

• Adam Levitin, "The Credit Cardholders' Bill of Rights", Credit Slips, February 25, 2008.
• Edward L. Yingling, "H.R. 5244 is wrong way to regulate credit card industry", The Hill, letter posted April 16, 2008.
• David Lazarus, "Banks love bailout, hate credit card curbs", Los Angeles Times, September 28, 2008.