Trends Will the Credit Cardholders’ Bill of Rights Bring Credit Relief? Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Mint.com Published May 12, 2009 4 min read Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. (anirudhkoul) H.R. 627, more commonly dubbed as the Credit Cardholders’ Bill of Rights, was passed by the House of Representatives by an overwhelming 357-70 vote on April 30th. The bill, yet to be voted on by the Senate, promises reform in the credit card industry by providing protection for credit cardholders. The Credit Card Crisis Why is credit card legislation needed? In 2008, credit card issuers levied $19 billion in penalty fees on families with credit cards and this year, card companies will break all records for late fees, over-limit charges, and other penalties, pulling in more than $20.5 billion. According to House Speaker Nancy Pelosi’s blog, “Credit-card debt in the U.S. has reached a record high of nearly $1 trillion — and almost half of American families currently carry a balance, and for those families the average balance was $7,300. One-fifth of those carrying credit-card debt pay an interest rate above 20 percent.” Something needed to be done to help the average consumer, that much is clear, but what would H.R. 627 mean for us cardholders? Before jumping into the specifics, let’s cover what first has to take place for this bill to provide any protection, as it has a long journey ahead of it. The Credit Cardholders’ Bill of Rights Journey to Action First, Senate Bill 414 must pass a Senate vote. Passage of 414 is not the guarantee that H.R. 627 was, as it offers added reform, and we can all guess how persuasive the credit card industry lobby must be. Next, Senate Bill 414 must be merged by H.R. 627, so that the two can live in complete harmony. Finally, it must be signed by President Obama – this should not be a tough sale. If the legislation is still alive after all is said and done, the majority of the bill won’t take effect until July, 2010. Barring major overhauls, how would the average cardholder benefit from the legislation? A Summary of the Credit Cardholders’ Bill of Rights To read the entire bill, you can find it on Representative Maloney’s site in its entirety. You may also check out the one page summary. Here are a few highlights from the summary, along with breakdowns on how it could impact you: Ending unfair or arbitrary interest rate increases 45 days notice before rate increase – in other words, you must be allowed sufficient time to prepare for and potentially prevent rate hikes. No more ‘any time, any reason’ rate changes. Letting consumers set hard credit limits to stop excessive over-limit fees No over-limit fees on those with limits – no charges for going over your fixed limit – you simply can’t charge any more. Cardholders can set limits – if you want to lower your limit to a fixed amount so that you don’t spend too much, you could potentially do so. Ending penalties for cardholders who pay on time No interest charged during a grace period – this is so that you aren’t double-billed. Additionally, you would not get assessed a fee on interest if you pay your bill on time. Requiring fair allocation of consumer payments No more forcing to pay off lower interest rates first, you should now get to at least pay off a fair allocation if you have cards with varying rates. Protecting cardholders from due date gimmicks Statements must be mailed 25 days before due date (up from 14) – giving you more time to get your payment in and avoid penalty. Preventing companies from using misleading terms and damaging consumers’ credit ratings “Fixed” and “Prime” rate must be used according to set definitions. Shielding vulnerable consumers from high-fee subprime credit cards Fees for subprime cards, with fixed fees over a year exceeding 25 percent of the credit limit, must be paid up front before the card is issued. This is because these cards target those who are the most vulnerable. What will the Credit Cardholder’s Bill of Rights Mean to you? It’s clear that H.R. 627 is a step in the right direction for consumer protection. But it’s just a slice of a much larger pie. How do you stand to gain relief as a result of this legislation? Where do you see further room for reform? If you actively choose to not use credit cards, do you think that card users should be granted this relief? Fore more of GE Miller’s writing, visit the personal finance blog 20somethingfinance.com. Previous Post Visualizing the US/China Trade Relationship Next Post A Visual Guide to the Federal Reserve Written by Mint.com More from Mint.com Browse Related Articles Mint App News Intuit Credit Karma welcomes all Minters! Retirement 101 5 Things the SECURE 2.0 Act changes about retirement Home Buying 101 What Are Homeowners Association (HOA) Fees and What Do … Financial Planning What Are Tax Deductions and Credits? 20 Ways To Save on… Financial Planning What Is Income Tax and How Is It Calculated? Investing 101 The 15 Best Investments for 2023 Investing 101 How To Buy Stocks: A Beginner’s Guide Investing 101 What Is Real Estate Wholesaling? Life What Is A Brushing Scam? Financial Planning WTFinance: Annuities vs Life Insurance