The much awaited credit card bill from congress should be heading for the office of the president anytime this month. With the support that the bill has been getting, not the least of which is President Obama's constant support campaigns, the bill is being processed through the senate with impressive speed.
As the bill continues to be processed in the senate, at least one organization is keeping an eye on what consumer protection rules the bill will carry and what it will not, Demos. Demos is an economic issues advocacy group based in New York. The group has not only been following the progress of the credit card bill but has also lobbied for the inclusion of as many consumer protection laws in the bill as possible.
Currently, the bill is nearing finalization in the Senate. Caleb Gibson, Demos federal affairs coordinator, gives a quick analysis of some of the measures that the bill will most likely carry when it is approved.
Retroactive Interest Rates Increases
Like the House version of the credit card bill, the Senate version will ban credit companies from increasing interest rates retroactively. The House version will, however, allow retroactive increases for cardholders who cannot make at least a minimum payment for more than 30 days. The Senate version extends this to 60 days.
Over the Limit Charges
Currently, credit card companies allow over the limit charges but will charge penalties to the consumer. This was not the case a few years ago, where charging over the card's limitations was strictly prohibited by the credit company. Credit companies justify their current practice by saying that they only want to keep their customers from being embarrassed when their purchases are rejected at the cash register.
Congress, on the other hand, has a different idea. A ruling in both the Senate and the House bill will ban over the limit charges unless the customer has agreed before hand to it.
Penalty Fees
Penalty fees that credit companies issue will have to be reasonably based on the actual costs that the credit company incurs when a credit policy is violated. The burden of proof for large late fees, over the limit charges, and other penalties will be on the credit companies.
Rules for Extending Credit to Those under 21 years
The bill from the House puts a limit to credit lines available for college students to either 20% of their income or $500, whichever is lower, unless they have co-signers. The Senate version makes proof of income, co-signers or a personal finance course passing grade requirements for credit approval for those under 21.