May 20th Update: The House of Representatives gave their approval of the CARD Act passed in the Senate and the bill is on its way to President Obama.
Today, the Senate voted 90-5 in favor of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, which is one step closer to credit card reform in America. In April, the House of Representatives passed a similar Credit Cardholders’ Bill of Rights Act of 2009 (357-to-70) and now the two chambers must reconcile the bills for President Obama to sign into law.
Here are the major parts of the Senate CARD Act:
- Credit card companies cannot raise interest rates on existing balances unless a card holder was 60 days behind.
- If a credit card company raises rates, six months of on-time payment would restore the interest rate to the previous level.
- Companies must notify consumers 45 days in advance of any rate increases.
- Companies cannot charge a late fee if they were late in processing a payment.
- Statements must be mailed 21 days before the payment due date.
- Rules were put in place that would make it harder for for companies to issue cards to those under 21.
- Interest rates cannot be increased within the first 12 months, promotional rates must be in place a minimum of 6 months.
The major points of the House’s Credit Cardholders’ Bill of Rights Act of 2009 are similar. The House’s version also requires promotional rates to remain in effect for a minimum of 6 months and other similarities regarding interest rate hikes and payment rules. There are additional rules in the House version that remain to be reconciled. For example, in the House bill, credit card companies must warn a customer if they get close to their credit limit.
It’s expected that the two bills will be reconciled and President Obama will be able to sign the bill into law before Memorial Day recess.
Credit Cardholders’ Bill of Rights Act of 2009 [Thomas.gov]
Credit CARD Act of 2009 [Thomas.gov]
Senate Passes Bill to Restrict Credit-Card Practices [New York Times]