New credit card legislation passes the House
The House of Representatives passed the HR 627, also known as the Credit Cardholders' Bill or Rights, on Thursday with an overwhelming 357 to 70 vote. Introduced by Rep. Carolyn Maloney (we dubbed her the "best friend a credit card user ever had" in the May issue of Money), the bill aims to protect consumers from sudden interest rate hikes, unannounced late fees, double-cycle billing and other abusive practices. A similar measure is expected to go to the Senate as early as next week, and President Obama supports the legislation.
AP outlines some of the key measures in the bill:
- Requires that customers receive 45 days' notice before interest rates are increased (if the bill becomes law, it won't take effect for another year--except for this provision, which would be enacted within 90 days)
- Eliminates double-cycle billing and "retroactive" interest rate hikes on previous balances
- Bans credit cards for anyone under 18 and puts limits on cards for college students
- Elminates fees for paying bills by phone or Internet
- Allows cardholders to set personal credit limits that cannot be exceeded
- Requires banks to apply payments to balances with higher interest rates first
Sounds good, huh? Of course, the banking industry doesn't think so. A Time.com story quotes a rep who's not so keen on new regulation:
"The American people can't manage their credit," says one industry heavyweight, "If you change the rules, guess what, we'll just start at a higher rate and you'll see a decrease in availability of credit and an increase in the cost to everyone else."
Ouch.
What do you think? Does this reform mean real change for consumers? Or will banks find new ways to goose their customers?