Credit Card Debt Law

Three big proposals (and probably a few more…) for credit card reforms are under consideration currently. They are:

• The Credit Cardholders’ Bill of Rights. Under consideration in the House of Representatives, this bill has 110 co-sponsors.

Read More: Baltimore Sun, Atlanta Journal-Constitution

• The C.A.R.D. Act - The Credit Card Accountability, Responsibility and Disclosure Act was proposed in the Senate on Wednesday.

The provisions:

- end universal default provisions;
- prohibit interest charges on debt paid during grace period;
- prohibit interest rate increases on existing balances;
- ban charging interest on late or overlimit fees;
- ban repetitive overlimit fees for a single incident;
- require credit card payments applied first to debt with highest interest rate;
- prohibit fees on payments made via telephone or electronic transfer.

Read More: Washington Post, Forbes, and The News Times.

• The Federal Reserve, Office of Thrift Supervision, and the National Credit Union Administration proposed regulations on Friday that will be subject to a 75 day public comment period and are predicted to be in effect in some form by year end (with no need for legislative approval).

The proposal currently:

- Requires 21 days from statement before late fees
- Stops banks from arbitrarily raising interest rates on existing balances
- Banks won’t be able to apply payment solely to the debt with the lowest interest rate.
- Prevents banks from arbitrarily raising interest rate on existing balances.
- Abolishes “two-cycle billing” - which adds interest rate charges by calculating the average daily balance for the last two billing periods rather than one.
- Ban on over-the-limit fees solely because of “holds” placed on credit cards which are awaiting release
- Ban from excessive fee harvesting on subprime credit cards.

Read More: The 2 Page Summary, The Full 269 Page Proposal
Baltimore Sun, Washington Post, New York Times