Credit Cardholders' Bill of Rights

Today, the House passed the Credit Cardholders' Bill of Rights Act (H.R. 627) by a vote of 357-70. In 2008, credit card issuers imposed $19 billion in penalty fees on families with credit cards and this year, card companies will break all records for late fees, over-limit charges, and other penalties, pulling in more than $20.5 billion. Credit-card debt in the U.S. has reached a record high of nearly $1 trillion — and almost half of American families currently carry a balance, and for those families the average balance was $7,300. One-fifth of those carrying credit-card debt pay an interest rate above 20 percent.

Earlier today, Speaker Pelosi and Rep. Carolyn Maloney heard from Molly Gordy who paid her bills on time, didn’t go over her limit, yet her interest rate was raised:

My name is Molly Gordy, and Congresswoman Maloney asked me to come from New York today after seeing my credit card story in the New York Times.

I am a working mom from New York. My story isn’t that different from millions of other Americans. I had a card that I pay regularly and on time. But somewhere along the line, they raised my interest rate from 12 to 13 percent with no explanation, and I never noticed.

Then, a few weeks ago, I received a notice from my card company that the interest rate on the card I have held for more than a decade would increase from 13 percent to 19 percent on my existing balance as well as on new purchases. That I noticed.

I admit that, like a lot of Americans, I do carry a revolving balance, but I have been diligent in paying my bills. I pay as much as possible every month, significantly more than the minimum, and it has been more than three years since I have been late on paying any credit card bill.

I called and yelled at the company and asked them, why they are doing this? This is not what I signed on for. The customer service representative told me, it is because of the tough economy. That made me really mad, because when I lost my job a few years back, they didn’t lower my rate.

The credit card company never did roll back the interest rate hike that they had slipped by me, but because I yelled at them, they agreed not to increase the rate on my current balance to 19 percent.

Now, here is my favorite part of this story. A week after this happened to me, I got a letter from another division of the same company offering me a new credit card at 0 percent interest on balance transfers for the next 16 months. I had to laugh. While one part of the company is telling me there is no money to lend to me as an existing customer, another part is offering me free lending as a new customer. In my world, we call that “bait and switch.”

As Representative Maloney says, a deal is a deal. If I make a contract with someone, they should not be able to change it just because they can.

The Credit Cardholders' Bill of Rights Act passed today levels the playing field between card issuers and cardholders by applying common-sense regulations that would ban retroactive interest rate hikes on existing balances, double-cycle billing, and due-date gimmicks. It would also increase the advance notice of impending rate hikes, giving cardholders the information they need and rights to make decisions about their financial lives. Our economic recovery depends on a shared prosperity — and we must put an end to these abusive practices that continue to drive so many Americans deeper and deeper into debt. Learn more about the bill>>

Author of the Credit Cardholders' Bill of Rights Act, Rep. Carolyn Maloney (D-NY):

Rep. Maloney:
“This is an important bill that affects many people, it is hard for me to come to the floor of Congress or walk down the street without hearing some story of some type of credit card abuse…We have done a great deal to help our banks shore up their capital requirements and allowing them to provide more loans, this will allow consumers to protect their interest rates, keep them lower so that they have more of their own money to invest in our economy. It’s fair to all concerned, I urge a ‘yes’ vote.”

Rep. Luis Gutierrez (D-IL):

Rep. Gutierrez:
“It’s wrong when you pick up a telephone, and you say ‘Listen, I just got my bill, but it’s three days before its due. Can I pay you over the phone?’ And they tell you ‘For 15 or 20 bucks.’ How many people in America have picked up the phone to complain to a credit card company, and if you get a little testy with them, which I have, because they anger me. I say ‘Could you please explain this to me?’ And they go ‘Click’ and hang up. Well, you know what we’re doing today, we’re going ‘Click’ right back to the credit card companies, except this time we’re hanging up the phone on abusive practices here in America against the American consumer.”

Rep. Keith Ellison (D-MN):

Rep. Ellison:
“I knew that we had a problem in America when my 19-year-old son, who didn’t have a job and was a college student, kept getting solicitations for credit cards. But I was quite convinced we had a real problem when my 13-year-old son, who did nothing more than apply for a Sports Illustrated subscription, started getting credit card solicitations. I hope some people don’t have access to credit, namely my 13-year-old son…My friends, this bill is popular because it makes sense for the American people, and so, from a partisan standpoint, I hope I do see a bunch of red up there from the other side of the aisle.”

Rep. Pascrell (D-NJ) addresses the Republican Members of Congress who defend the credit card companies' deceptive practices:

Rep. Pascrell:
“Americans are sick and tired of being the victims of a crafty and fatally opportunistic financial sector. You may defend that sector, you have all the right to do it, thank God we’re in America. Americans are discovering that even if they pay their bills, their interest rates still get jacked through the roof. The credit card industry and some Members have been quick to condemn this legislation, but today, I ask those who have spoken against the legislation, ‘What possible detriment is there in increasing transparency in the imposition of fees? How can we possibly be against empowering Americans in taking control of their credit card finances?”

Reps. Gutierrez and Maloney speak out against the Republican motion to recommit which would have delayed the protections to consumers included in this legislation:

Rep. Gutierrez:
“The only group in America that can be happy if we delay this bill any longer are those that are engaged in deceptive predatory lending to consumers who are already unemployed, who are already suffering, who are already at the mercy of an economic system that just isn’t there for them. Let’s stand up for consumers.”