Merkley: Credit Card Reform On the Way

The U.S. Senate passed the Credit
Card Accountability Responsibility and Disclosure Act of 2009 today by
a vote of 90 to 5.  Oregon’s Senator Jeff Merkley was an original
co-sponsor of the bill and urged the White House to support strong protections
for consumers.

“Today’s vote in favor of
credit card reform is a huge victory for American consumers,” said
Merkley.  “The CARD Act will end deceptive practices and hidden fees that
are stripping wealth from Oregon families.  I hope we’ll soon have a bill
on the President’s desk to ensure that these reforms are in place and helping

While the Federal Reserve has
issued new regulations addressing some abuses, those reforms would not go into
effect until July 2010 – too late for many consumers who are already deeply in
debt because of the economic crisis.  President Obama has repeatedly
stated that credit card fairness is a high priority for his
Administration.  The president even held a town hall in New Mexico on the
topic last week.

“I have heard from families
across Oregon who have been hit with fees and arbitrary rate increases even
though they paid their bills on time and did everything right.  It’s time
to diffuse the ticking time bomb of credit card debt that resides in the
pockets of every American,” said Merkley.

The Credit CARD Act would both
speed up and strengthen reforms of the industry by: 

  • Prohibiting
    “universal default” on existing balances, the bait-and-switch practice of
    raising interest rates on a consumer for actions unrelated to the card in
  • Requiring
    payments beyond the minimum monthly payment be applied to balances with
    the highest rate of interest; 
  • Prohibiting
    fees based on the method of payment, be it telephone, mail, internet, or
  • Prohibiting card companies from issuing late fees
    if the card issuer delayed crediting the payment;
  • Requiring card companies who increase a
    cardholder’s interest rate to review that decision in six months and decrease
    the rate if warranted;
  • Requiring that consumers affirmatively “opt-in”
    to over-the-limit plans, which will protect consumers from unwanted and unfair
    over-the-limit fees; and

  • Limiting
    the aggressive solicitation of young people.