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May 30, 2015

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Credit CARD Act of 2009
An Act to amend the Truth in Lending Act to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes.

The Credit Cardholders' Bill of Rights includes several provisions aimed at limiting how credit card companies can charge consumers, but does not include price controls, rate caps, or fee setting. According to a summary of the bill:

  • Cardholders Deserve Protections against Arbitrary Interest Rate Increases.
    • Requires card companies give cardholders 45 days notice of any interest rate increases.
    • Gives cardholders the right to cancel their card and pay off their existing balance at the existing interest rate and repayment schedule if they get hit with an interest rate hike; gives cardholders 3 billing cycles after the rate increase to say no to these new terms.
    • Prevents card companies from retroactively increasing interest rates on the existing balance of a cardholder in good standing for reasons unrelated to the cardholder's behavior with that card (the so-called "universal default" rate increase).
    • Prohibits card companies from arbitrarily changing the terms of their contract with a cardholder, banning the so-called practice of "any-time, any-reason repricing."
  • Cardholders Who Pay on Time Should Not Be Penalized.
    • Prohibits card companies from charging interest on debt that is paid on time during a grace period. This prevents the so-called "double-cycle billing" practice.
    • Prohibits card companies from slapping fees on the remaining interest-only balance of a cardholder who has paid his/her bill on time.
    • Customers who have been subject to a rate increase and then pay on time for six consecutive months must have their interests rates returned to the rate it was before the rate increase. Requires creditors to review payment history each six months and to determine if a rate decrease should apply.
  • Cardholders Should Be Protected from Due Date Gimmicks.
    • Gives cardholders time to pay their bills by requiring card companies to mail billing statements 21 calendar days before the due date (14 days was the previous minimum).
    • Requires that payments made before 5 p.m. EST on the due date are considered timely.
    • Requires the due date to fall on the same day each month. If the fixed due date normally falls on a Saturday, Sunday or legal banking holiday, then the due date shall be pushed to the next business day after the date. This measure prohibits due dates to fall on a weekend or holiday.
    • Directs card companies to provide on every statement, a phone and internet address that a cardholder can access for payoff balances.
    • Prohibits card companies from charging late fees when a cardholder presents proof of mailing payment not less than 7 days before the due date.
  • Cardholders Should Be Protected from Misleading Terms.
    • Prevents card companies from using terms such as "fixed rate" and "prime rate" in a misleading or deceptive manner by establishing single, set definitions of those terms.
    • Gives cardholders who get pre-approved for a card the right to reject that card up until the moment they activate it without having their credit adversely impacted.
    • Imposes a requirement that creditors have a minimum size font on their statements to improve readability of the terms for the credit card.
  • Cardholders Deserve the Right to Set Limits on Their Credit.
    • Requires card companies to offer consumers the option of having a fixed credit limit that cannot be exceeded.
    • Prevents card companies from charging over-the-limit fees on a cardholder with a fixed credit limit.
  • Card Companies Should Fairly Credit and Allocate Payments. (Title I, Sec 104 (4))
    • Requires card payments to be applied to the debt with the highest interest rate first, namely debt accrued on cash advances. Most card companies use debtors' payments to pay off a lowest interest rate balances first. The dollar amount of the minimum payment will still apply to pay off the lowest interest rate; however any dollar amount less the minimum payment will be applied to the highest interest debt.
  • Card Companies Should Not Impose Excessive Fees on Cardholders.
    • Limits the amount of "over-the-limit" fees card companies are allowed to charge to 3. Some card companies currently charge limitless fees for going over credit limits.
    • Requires creditors to approve customers who charge over the limit, and over-the-limit that.
    • Creditors are only authorized to charge over the limit fees if a late charge applies from their end. Creditors who charge annual fees, account protection plans, or finance charges which then result in an exceeded balance are not allowed to then charge an over-the-limit fee.
  • Vulnerable Consumers Should Be Protected From Fee-Heavy Subprime Credit Cards.
    • Requires that all fees for subprime cards, whose total fixed fees over a year exceed 25 percent of the credit limit, be paid up front before the card is issued. These cards are generally targeted to vulnerable consumers.
  • Congress Should Provide Better Oversight of the Credit Card Industry.
    • Improves existing data collection on industry profits, as well as card fees and rates; requires this information to be presented to Congress every year.
  • Minimum Payment Explanation
    • Demands that creditors print on their statements if the debtor makes the minimum payment only (with no further increases in debt) how long it would take to retire the debt and how much the debtor would pay in interest combined.
    • Requires creditors to print on their statements the payment it would take the debtor to retire the debt in three years, how much the debtor would pay in interest combined and the difference than if the debtor was to pay only the minimum payment.
  • Limits Credit Cards to Teens
    • A credit card cannot be issued to someone under age 21, unless they have a co-signer (who is 21 or over), or can provide proof of a means to repay.
  • College Bank Curtailment
    • Requires banks to provide a reason for participating on college campuses and at university-themed events.
    • Outlaws banks giving gifts or any promotional items (such as coupons for free pizza) to entice debtors to take on debt by signing with their credit cards.
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