Legislation Reining in Unfair Interest Rate Hikes And Unjust Fees a Strong Step Forward

New legislation introduced today by House Financial Institutions and Consumer Credit Subcommittee Chairwoman Rep. Carolyn Maloney (D-NY) and Financial Services Committee Chairman Barney Frank (D-MA) curbs some of the most abusive credit card lending practices, consumer groups said.

“This legislation is an important step forward in eliminating the worst credit card tricks and traps that sap billions of dollars from Americans’ wallets every year and illegitimately pump up issuers’ profits,” said Travis B. Plunkett, legislative director of the Consumer Federation of America. “We commend Chairwoman Maloney for recognizing that these abuses contribute to the rising rate of card delinquencies and the need to rein in unfair practices to forestall an even greater crisis. The sub-prime meltdown demonstrates the importance of ending abusive lending practices when warning signs arise.”

Among the key provisions of the “Credit Card Bill of Rights Act” are prohibitions on:

o Bait-and-switch interest rate and fee hikes for any or no reason at all during the life of the card;
o Assessing hidden and unfair interest rate charges by charging interest on balances already paid off;
o Unjustifiably maximizing interest charges by requiring consumers to pay off balances with lower interest rates before those with higher rates;
o Charging late fees when consumers mail their payments seven days in advance of the due date; and
o Applying certain unfair interest rate hikes retroactively to balances incurred under the old rate.

“Working families are the favorite targets of big banks and credit card issuers, paying more each year in unreasonable fees and credit card interest,” said Stephen Lerner, assistant to the President and director of the Private Equity Project for Service Employees International Union. “SEIU will fight alongside Congress and Reps. Frank and Maloney to put a stop to the big banks’ worst abuses.”

Source: Consumer Federation of America

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