Credit Cardholders' Bill of Rights Act of 2009--Continued

Floor Speech

CREDIT CARDHOLDERS' BILL OF RIGHTS ACT OF 2009--Continued -- (Senate - May 13, 2009)

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Mr. BENNET. Mr. President, l rise today to congratulate Chairman Dodd and Senator Shelby for developing the legislation we have before us. Pass this bill, and we will be able to go home and tell our constituents with confidence that the Credit CARD Act of 2009 is a groundbreaking consumer protection achievement. I am pleased that, as a member of the Banking Committee, I was able to vote for the bill in committee and help pave the way for floor consideration this week.

In my travels around Colorado, I have been struck by stories of unfair, undeserved credit card practices, hitting consumers at exactly the hardest time. Melissa Mosley of Durango, CO, told me about how tough economic times forced her to use several credit cards for purchasing supplies and day-to-day expenses for her small business. After a stretch of making minimum payments, Melissa's interest rates suddenly rose, one even reaching 32 percent. The company is refusing to negotiate, making it even more difficult for Melissa and her husband to make ends meet.

And in Cedaredge, Joy Beason is a small business owner who runs a small herbal products business. Last fall, Joy's interest rates tripled from 7.9 percent to 23 percent without notification of any kind. The high interest rates prevent her from paying down more of the principal on the card, leaving her in an endless cycle of debt.

And there's Garrett Mumma of Pueblo whose interest rate on his credit card doubled from 7.9 percent to 13.65 percent despite his solid history of payment. In a letter to me, Garrett wrote, ``I only want what's fair. I want the credit card companies to honor their original agreements and not to gouge the American people when they are already suffering so much from the present economic crisis.''

These struggles paint an unacceptable picture. We need to rein in abusive practices and create a new set of rules that works for Colorado consumers.

According to a Pew Safe Credit Cards Project study, 87 percent of cards allowed the issuer to impose automatic penalty interest rate increases on all balances, even if the account is not 30 days or more past due. And 93 percent of cards allowed the issuer to raise any interest rate at any time by changing the account agreement.

I am voting for this bill because it protects consumers from excessive fees, ever-changing interest rates where you do not even get notice, and complex contracts intended to confuse you until you give up even trying to understand.

It protects consumers by establishing fair and sensible rules for how and when credit card companies can raise interest rates. Card companies must give 45 days' notice before increasing rates, and can no longer do so on existing balances.

It cracks down on abusive fees. Consumers no longer will have to pay a fee just to pay a bill. And credit card companies must mail statements 21 days before the bill is due, instead of the current 14 days, so cardholders can avoid hefty late fees. It also stops credit card companies from raising rates on a consumer's existing balance because of a payment issue with a separate credit card. These reforms will save some families thousands of dollars a year. And all Americans will be able to access better information to make important financial decisions.

I also want to take one moment in particular to highlight the importance of a new provision in the bill that connects the dots for some of our younger borrowers. The bill provides for consumer literacy education classes, so that when a young person does not have a parental cosigner, and cannot show ability to repay, they can at the very least approach the credit card system with some understanding of the potential dangers they are facing. I am all for consumer choice, but we need our young people making informed choices before they find themselves in a world of debt.

I believe more educated young consumers will stay solvent, stay debt free, learn the value of saving, and make better decisions for their future.

At the same time, this legislation is not doing anything that the industry has not known was coming. It builds on rules that the Bush administration scheduled to go into effect in mid-2010. The industry will adjust. In a few instances, it may not be seamless. But this is one moment when we all need to band together and remember that Main Street matters.

People in Colorado are struggling, they cannot afford a sudden hike in their interest rates that they were not informed of and could not do anything to avoid. No longer. I stand proudly with Senator Udall, who has worked to protect consumers from credit card company excesses for years, in urging the full Senate to stand together, break through the partisan divide and come together and pass the Dodd-Shelby legislation.

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