Congresswoman Laura Richardson Announces New Credit Card Protections Effective Today

Statement

Congresswoman Laura Richardson (D-CA37) today announced that the long awaited new protections for credit cardholders which prohibit a number of industry practices, including unfair rate increases, abusive fees and penalties, will take effect on Monday, February 22.
"After the collapse of Wall Street, American tax payers, President Obama, and the Congress took dramatic steps to help. Unfortunately as the financial industry stabilized, the folks on Main Street were not only left high and dry, but further penalized," said Congresswoman Richardson. "Over eight months ago our office started receiving calls from constituents who had credit and paid their bills on time, but discovered their limits were drastically cut and rates alarmingly raised without justification.

"I strongly supported passing the Credit CARD Act, also known as the Credit Cardholders' Bill of Rights, because consumers need relief from the billing practices of the credit card industry," Congresswoman Richardson added. "The changes of notice and interest charges just to name a few that go into effect on Monday will hold credit card companies more accountable, while providing well deserved new protections for consumers."
The provisions of the Credit CARD Act that take effect on Monday will:
* Prohibit arbitrary interest rate increases and universal default on existing balances;
* Prohibit 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;
* Prohibit 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;
* Require payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest;
* Prohibit issuers from setting early morning deadlines for credit card payments;
* Prohibit interest charges on debt paid on time (double-cycle billing ban);
* Require issuers extending credit to young consumers under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt; or proof that the applicant has an independent means of repaying any credit extended; and,
* Protect 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.
Several provisions went into effect on August 20, 2009. These include: written notices to consumers of any increases in the interest rate or otherwise makes a significant change to the terms of a credit card account; the right to cancel a card before any rate hike goes into effect; and, requiring billing statements to consumers 21 days before the due date of any payments.
Several provisions will go into effect on August 22, 2010. These include requirements that that penalty fees to be reasonable and proportional to the omission or violation, and that creditors periodically review all interest rate increases since January 2009 and reduce rates when a review indicates that a reduction is warranted. Additionally, provisions that limit dormancy, inactivity, and service fees associated with gift cards go into effect.
Congresswoman Richardson is a Democrat from California's 37th Congressional District. She is a member of the House Committees on Transportation & Infrastructure and Homeland Security. She is chair of the Homeland Security Subcommittee on Emergency Communications, Preparedness, and Response. Her district includes Long Beach, Compton, Carson, Watts, Willowbrook and Signal Hill.

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