NASE News

Consumer Credit Card Protections Bill Passes House, Heads To Senate

Consumer Credit Card Protections Bill Passes House, Heads To Senate

Washington, D.C., May 6, 2009 -- The Government Accountability Office (GAO) reports that one-fifth of those carrying credit card debt pay an interest rate above 20 percent. The prevalence of credit cards with high interest rates and fees has prompted lawmakers to pass legislation that could affect the credit card statements of millions of Americans.

In a bipartisan vote, the U.S. House of Representatives has approved the Credit Cardholders' Bill of Rights (H.R. 627), which puts tougher restrictions on the ability of credit card companies to increase their interest rates and use practices such as double-cycle billing. The bill also requires that companies notify consumers 45 days before a rate increase and explain at that time how the change will affect an existing balance.

"This is one more step in our efforts to assist responsible, hardworking Americans who should not be subjected to these practices at any time, much less during a recession," said House Majority Leader Steny H. Hoyer (MD). "As we work to protect consumers, I look forward to working with the Senate to get this legislation to the President's desk for a signature as soon as possible."

The measure is set to be debated in the Senate this week, where a stricter version drastically restricts the ability of card companies to raise rates on late-payers or those with shaky credit histories. At the request of the White House, the following measures – which are already included in the Senate bill – were included in the House legislation:

- Requirement that payments must first be applied to the debt with the highest interest rate;
- Mandatory annual review by the Federal Reserve to assess the effects of the bill on interest rates, annual fees and denial of new credit cards;
- On each bill, companies must disclose the long-term costs of paying only the minimum balance;
- Promotional rates on new cards must be valid for a minimum of six months;
- Terms of the credit card agreement are to be posted on the card issuer's Web site.

The National Association for the Self-Employed (NASE) commends the House of Representatives on the passage of this important consumer protections bill. Unfortunately, the self-employed and micro-business owners who use small-business credit cards are not shielded in the House-passed legislation. It is the hope of the NASE that language will be included in the Senate version to extend these safeguards.