Sanders Wins Amendment to Stop Increased Minimum Credit Card Payments

SANDERS WINS AMENDMENT TO STOP INCREASED MINIMUM CREDIT CARD PAYMENTS
11/16/2005

Sanders amendment ensures that new federal regulations doubling minimum payments would not apply to existing accounts

Burlington, VT-Congressman Bernie Sanders won an amendment today to protect millions of Americans from seeing up to a doubling in their mandatory minimum monthly credit card payments. Federal banking regulators recently issued regulatory guidance that would double the minimum payments consumers are required to make on their monthly credit card bills. Sanders' amendment would ensure that this federal guidance applies only to new credit card accounts, and not cards already issued. The amendment passed in the Banking Committee as part of the Financial Services Regulatory Relief Act of 2005. The regulatory relief bill will go before the full House in the coming weeks.

Sanders said, "Many American families find it necessary to use credit cards to help pay expenses for their families, especially unexpected large costs like car repairs, medical bills, or to replace appliances. When they do so, they often have to pay it off over time so that it fits within tight family budgets. It's not right for federal regulators to come in after the fact and tell people they are going to see their minimum credit card payments doubled. For many, these regulations would turn a bad situation into a financial burden they simply cannot meet."

The regulations were issued in an attempt to force consumers to pay off their credit card balances faster. When interest rates rise, some credit card holders may find that if they pay only the minimum payment every month that their balance actually grows because they interest charges they are incurring are greater than their minimum payment. However, the regulation would put many families with tight budgets in the position of not being able to pay their bill on time - putting them at greater risk of bankruptcy. Sanders has introduced separate legislation regulating some of the most abusive practices of credit card issuers, including unjustified increases in interest rates.

Sanders said, "It's wrong to change the rules of the game in the middle. Putting consumers at greater risk of bankruptcy is not the way to deal with the serious problem of credit card companies getting excessive interest from their customers. The way to do that is to address the issue of exorbitant interest rates head on, as well as to eliminate bait and switch tactics where consumers are promised one rate and then see that rate significantly raised even though they are paying their bill on time."

http://bernie.house.gov/documents/document.asp?issueNum=4654