Walz Votes to Protect Consumers From Unfair Credit Card Company Practices

Press Release

WALZ VOTES TO PROTECT CONSUMERS FROM UNFAIR CREDIT CARD COMPANY PRACTICES

Today, Congressman Tim Walz joined Democrats and Republicans in the House in voting for HR 5244, the Credit Cardholders' Bill of Rights Act of 2008, which passed the House by margin of 312 to 112. The bill ends unfair, arbitrary interest rate increases, gives consumers control over credit limits, ends unfair penalties for consumers who pay on time, and requires a fair allocation of payments made by cardholders.

"Credit card debt is a problem for millions of Americans who are struggling in this economy. Today, we took on the big credit card companies. Enough is enough," said Congressman Tim Walz. "Credit card companies have a right to be paid back, plus interest for what they lend cardholders, but they have no right to gouge consumers with out of the blue interest rate hikes, due date gimmicks or penalties for paying on time."

"Gouging consumers at a time of economic crisis is unacceptable and these companies who use backdoor maneuvers to squeeze every dime out of the American public do a disservice to us all. The recovery of our economy will take a commitment from consumers, banks, Wall Street and credit card companies alike to play fair, follow the rules and to treat each other with respect."

Summary of the Credit Cardholders' Bill of Rights

H.R. 5244, the "Credit Cardholders' Bill of Rights," provides crucial protections against unfair, but unfortunately common, credit card practices.

Ends Unfair, Arbitrary Interest Rate Increases.

* Prevents card companies from unfairly increasing interest rates on existing card balances - retroactive increases are permitted only if a cardholder is more than 30 days late, if a pre-agreed promotional rate expires, or if the rate adjusts as part of a variable rate.

* Requires card companies to give 45 days notice of all interest rate increases so consumers can pay off their balances and shop for a better deal.

Lets Consumers Set Hard Credit Limits, Stops Excessive "Over-the-Limit" Fees.

* Requires companies to let consumers set their own fixed credit limit.

* Prevents companies from charging "over-the-limit" fees when a cardholder has set a limit, or when a preauthorized credit "hold" pushes a consumer over their limit.

* Limits (to 3) the number of over-the-limit fees companies can charge for the same transaction - some issuers now charge virtually unlimited fees for a single limit violation.

Ends Unfair Penalties for Cardholders Who Pay on Time.

* Ends unfair "double cycle" billing - card companies couldn't charge interest on debt consumers have already paid on time.

* If a cardholder pays on time and in full, the bill prevents card companies from piling additional fees on balances consisting solely of left-over interest.

Requires Fair Allocation of Consumer Payments.

* Many companies credit payments to a cardholder's lowest interest rate balances first, making it impossible for the consumer to pay off high-rate debt. The bill bans this practice, generally requiring payments to be allocated proportionally to balances that have different rates.

Protects Cardholders from Due Date Gimmicks.

* Among other measures, requires card companies to mail billing statements 25 calendar days before the due date (up from the current 14 days), and to credit as "on time" payments made before 5 p.m. local time on the due date.

Prevents Companies from Using Misleading Terms and Damaging Consumers' Credit Ratings.

* Establishes standard definitions of terms like "fixed rate" and "prime rate" so companies can't mislead or deceive consumers in marketing and advertising.

* Gives consumers who are pre-approved for a card the right to reject that card prior to activation without negatively affecting their credit scores.

Protects Vulnerable Consumers From High-Fee Subprime Credit Cards.

* Prohibits issuers of subprime cards (where total yearly fixed fees exceed 25 percent of the credit limit) from charging those fees to the card itself. These cards are generally targeted to low-income consumers with weak credit histories.

Bars Issuing Credit Cards to Vulnerable Minors

* Prohibits card companies from knowingly issuing cards to individuals under 18 who are not emancipated minors.}

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