Credit Cardholders' Bill of Rights

Near the end of 2008, the Federal Reserve Board adopted new rules that would end some of the worst abuses by credit-card issuers. These rules, 18 months in the making, would put an end to such practices as hiking interest rates on customers who have never made a late payment and kept their accounts current, as well as the practice of increasing interest rates on money already borrowed. Trouble is, the rules won't take effect until July of next year.

The banned practices have victimized consumers for years. They unfairly remove untold amounts of money from households already squeezed to the limit by debt and add to the revenue of financial institutions often controlled by the same entities receiving billion of dollars in taxpayer bailouts.

One result is to hurt the credit standing of individuals who don't deserve bad treatment. One gimmick that the companies have relied on, for example, is to shorten the time between the arrival of the bill and the due date. Under the new rules, credit-card companies won't be able to charge a late fee if they mail bills to cardholders less than 21 days before payment is due. The rules also put an end to the practice called "universal default," whereby one issuer can jack up the interest rates if the consumer makes a late payment on any other credit account for any reason.

Consumers should not have to wait until mid-2010 for these rules to take effect. The alternative is for Congress to speed up consideration of the "Credit Cardholders' Bill of Rights" (H.R. 627), which would take effect three months after enactment. An earlier version passed the House last year by a 312-112 vote, but died because the Senate failed to act in time.

The new measure contains many of the same common-sense rules as those adopted by the Fed, but adds some provisions designed to reform the credit-card industry and improve consumer protection without resorting to rigid measures such as interest-rate caps or price controls. It requires card companies to offer consumers the option of a fixed credit limit that cannot be exceeded, a useful provision that would remove one of the pretexts often used to raise interest rates.

The legislation is preferable to the Fed regulation not only because it could take effect sooner, but also because it offers stronger protection in a variety of ways. Enacting the measure into law is preferable to an executive rule that could be overturned if the Federal Reserve Board reverses itself at a later date. Given the indefensible nature of abusive practices and the increasing difficulty that Americans have making ends meet in a tight economy, there is no point in waiting longer than needed. --Miami Herald

U.S. Senate Banking Committee Chairman Chris Dodd has scheduled a hearing on February 26 to consider the Senate version sponsored by Senators Udall and Schumer. It is important to contact Senator Blanche Lincoln and urge her to support legislation enacting the Credit Cardholders' Bill of Rights. She is a member of the Senate finance Committee and was a supporter of legislation that removed protections for working families with credit card debt.

In the 2008 election cycle, Blanche Lincoln has received three times more money from PACs than Individuals ($299,705 v. $86,086). Lincoln has received more money from Out-Of-State donors than In-State donors ($1,576,831 v. $1,125,911) and received more in contributions from Finance, Insurance & Real Estate this year than any other economic sector. Lincoln has received more than four times as much money from Business PACs than from Labor PACs in the 2008 election cycle.