Merkley Joins Effort to Reform and Strengthen Oversight of Credit Card Industry

Washington D.C. – Oregon’s Senator Jeff Merkley has co-sponsored legislation to end dangerous credit card practices that have buried many American consumers in debt.  The Credit Card Accountability, Responsibility and Disclosure (CARD) Act, sponsored by Banking Committee Chairman Chris Dodd, will strengthen regulation and oversight of the credit card industry and tighten the rules to prohibit unfair and deceptive practices such as sudden spikes in interest rates on cardholders in good standing and double-cycle billing.

Senator Merkley, a member of the Senate Committee on Banking, Housing, and Urban Affairs, will also participate in a committee hearing later today focused on strengthening credit card protections for consumers.

“I’m proud to join Senator Dodd in introducing the Credit Card Accountability, Responsibility and Disclosure Act,” said Merkley.  “Too many Americans have been placed into financial hardship by unfair policies buried in the fine print of their credit card statements. The CARD Act helps remedy these problems.”

The CARD Act will assist consumers by:

  • Strengthening Credit Card Industry Oversight and Supervision

The CARD Act improves data collection and allows federal financial regulators to regulate unfair or deceptive practices.

  • Preventing “any-time, any reason” Increases in Interest Rate and Terms

The CARD Act prevents companies from increasing interest rates for no reason.  It puts an end to unilateral changes to credit card agreements and allows customers who close their accounts to pay under the terms that exist at the time the account is closed.  It also requires any interest rate increases to apply only to future credit card debt.

  • Requiring Fairness in Application of Card Payments

The CARD Act requires payments to be applied first to credit card balance with the highest rate of interest and prohibits issuers from setting early morning deadlines for credit card payments.

  • Protecting the Rights of Financially Responsible Credit Card Users

The CARD Act prohibits interest charges when debt is paid on time and late fees when the card issuer delays crediting payment.  It requires statements to be mailed 21 days before the bill is due rather than the current 14 as well as same-day credit for payment at local branches.                                                                                                 

  • Prohibiting Exorbitant and Unnecessary Rates and Fees

The CARD Act prohibits interest on transaction fees and prevents multiple over-limit fees.  It also requires issuers to offer consumers the option of operating under a fixed credit limit.                                                                                             

  • Providing Enhanced Disclosures of Card Terms and Conditions

The CARD Act requires cardholders to be given 45 days notice of any interest rate increase and provide disclosures when card terms change.  It also requires full disclosure of payment due dates and applicable late payment penalties in billing statements.

  • Ensuring Adequate Safeguards for Young People

The CARD Act requires additional proof of responsibility for debt for anyone under the age of 21 applying for a credit card.  It also limits prescreened credit card offers to young people.

“In recent years, there has been little incentive for lenders to put the well-being of American consumers ahead of profit margins.  This culture of profit over people has contributed to the current financial crisis and has damaged the financial well-being of millions of hard-working families,” said Merkley.  “If current credit card practices aren’t reined in, the serious credit crunch facing the nation promises to become a dire credit crash.  With support from the rest of the Senate, the CARD act will bring much-needed accountability and oversight to the credit card industry.”