Debt City

With all the news from Washington we thought it might be a good moment to mention H.R. 5244.

Huh? What is H.R. 5244 and why should anyone care?

It’s only the Credit Cardholders’ Bill of Rights Act of 2008. If you’re tired of paying too much to credit card companies you need to know about this bill — and you need to tell your friends, family, neighbors and everyone. As the old song says, go shout it from the mountain tops.

Here’s where it stands: The bill was introduced in the House by Rep. Carolyn Maloney (D-NY) and has 155 co-sponsors. So far the bill has passed in the House by a vote of 312-112 in September.

The bill has also been introduced in the Senate as S. 2753, the Credit Card Reform Act of 2008, by Sen. Robert Menéndez (D-NJ). So far, it’s been a no-go in the Senate but if not in the lame duck session, then expect the bill to be re-introduced in both chambers in January when the new Congress is seated.

What does the bill say? Just read the summary from the Library of Congress.

Credit Cardholders’ Bill of Rights Act of 2008 — Amends the Truth in Lending Act to prohibit a creditor from using certain adverse information, including information in a consumer report or any change in a consumer’s credit score, as the basis for increasing any annual percentage rate (APR) of interest on the consumer’s outstanding balance under an open end consumer credit plan, except for actions or omissions of the consumer directly related to such account. (Thus eliminates the universal default for credit already outstanding.)

___Bars a creditor from changing any term of the contract or agreement of an open end consumer credit plan until contract renewal, except for specific material reasons already contained in the contract or agreement.

___Requires advance notice of credit card account rate increases.

___Authorizes a consumer who receives such notice to: (1) cancel the credit card without penalty or the imposition of any fee; and (2) pay any outstanding balance that accrued before the effective date of the increase at the APR and in the repayment period in effect before notice was received.

___Prohibits a creditor from imposing interest on credit repaid within the interest-free repayment time period. (Thus prohibits double cycle billing).

___Prohibits the imposition of fees on any outstanding balance on a credit card account attributable only to accrued interest on previously repaid credit.

___Requires each periodic statement of account to provide specified information on obtaining the payoff balance.

___Prohibits a creditor from furnishing information to a consumer reporting agency concerning a newly opened credit card account until the consumer has used or activated the credit card.

___Details mandatory pro rata payment allocations by a creditor.

___Authorizes a consumer to opt-out of creditor authorization of over-the-limit transactions if fees are imposed.

___Restricts the frequency of over-the-limit fees.

___Specifies the contents of credit card price and availability information the Board of Governors of the Federal Reserve System must collect and make public semiannually.

___Prescribes a standard for the initial issuance of subprime or “fee harvester” cards (accounts requiring first-year fee payments in excess of 25% of the total amount of credit authorized).

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This entry was posted on Monday, November 24th, 2008 at 4:47 am and is filed under Credit Cards, Debt Consolidation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.