Congress May Hit Back
February 22, 2008
Credit card companies have been pulling some pretty smooth moves lately on consumers. Now, Congress is hitting back with a Federal bill that is aimed at giving credit card holders some protection against capricious and unwarranted increases in interest rates. The bill is scheduled to go before the U.S. House of Representatives soon.
One of the co-sponsors of the bill is U.S. Rep. John Dingell, D-Dearborn. He has said he will be one of the co-sponsors of the measure and that legislation is needed in order to protect credit card consumers from interest rate increases that are no based on credit history. “This is about fairness,” he said recently. “This is an idea born from the real problems that Americans are dealing with. The credit card industry has profited off changes to the law in recent years, for example with respect to bankruptcy. Now it is time to level the playing field and look out for the consumer.”
In addition to clarifying some language, the bill also outlines rights for consumers with credit cards and would include cardholders the right to cancel their cards if they are faced with rate increases. It would also allow them to pay off existing balances at the rates they agreed to when they borrowed. In addition, it would offer protection to consumers against arbitrary rate increases that are based on reasons unrelated to payment history. It would bar issuers from applying the higher interest rate retroactively to existing balances.
Another important issue that it addresses is that it would require card issuers to allocate cardholders’ payments between their balances when cardholders have balances at different rates.
There are other important clauses in the bill and consumer advocates are hoping it passes quickly