Credit Card Bill of Rights
March 3, 2008
Representative Carolyn Maloney (D-NY), Chair of the Financial Institution and Consumer Credit Subcommittee, introduced a bill on February 7 that addresses current issues and problems associated with credit cards.
The bill is known as the “Credit Cardholders Bill of Rights Act of 2008″ and if passed it would establish additional federal regulation and oversight of credit card lending practices including a requirement that banks provide greater disclosure when they are changing interest rates and contract terms. It also addresses the issue of limiting fees associated with late or partial payments and exceeding credit limits.
The Maloney bill will also call for prohibiting the “universal default” policy that is often used in the credit industry. Under the universal default policy, one late payment on a particular credit card or other credit service can result in all other credit holders of the consumer being able to raise their rates on the consumer as well, even if the consumer did not default or make a late payment to that credit holder.
Many consumer advocacy groups have thrown their support behind the bill and have called it the first step towards comprehensive credit card reform.
In addition to addressing credit card reform, the bill would also help reduce some of the problems associated with the bankruptcy reforms of 2005. The 2005 reforms made it much harder for consumers to declare bankruptcy.