Rep. Foster Backed Credit Card Law That Goes Into Effect Today

Press Release

Rep. Foster Backed Credit Card Law That Goes Into Effect Today

Rep. Bill Foster (IL-14) commended the provisions of the Credit Cardholders' Bill of Rights, which went into effect today. Foster voted for the legislation last year when it passed the House.

"The Credit Cardholders' Bill of Rights is essential to consumer protection -- at a time when my constituents are having trouble make ends meet, the last thing they need is additional credit card fees and higher interest rates," said Foster. "The provisions that go into effect today will ensure that consumers will be treated fairly by credit card companies, preventing unreasonable and abusive practices."

According to Consumer Reports, in 2008, credit card issuers imposed $19 billion in penalty fees for late fees, over-limit charges and other penalties. This year, the companies stand to make more than $20.5 billion in penalty fees.

"As a businessman and scientist, I understand the importance of data and the facts are clear -- consumers and small businesses are being unfairly gouged by the credit card industry, and this law will restore fairness to the system," said Foster.

As of today, credit card companies are prohibited from arbitrary interest rate increases and early morning payment deadlines, and double-cycle billing is banned. The law requires issuers extending credit to young adults under the age of 21 to obtain the signature of a parent or guardian who will take responsibility for the debt or proof that the applicant has a means of repaying any credit.

In addition, the bill requires payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest and protects recipients of gift cards by requiring all gift cards to have at least a five-year life span, and eliminates the practice of declining values and hidden fees for those cards not used within a reasonable period of time. Finally, the law prohibits issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions, and also limits over-limit fees on electing cardholders.

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