CARD Reform

CARD Reform

By:  Gary Stuzman - Opinion

The U.S. Senate passed by 90-to-5 Tuesday the Credit Card Accountability Responsibility and Disclosure Act. It will help end to deceptive practices and hidden fees by credit card companies and protect families here in Oregon and around the U.S..

Our Sen. Jeff Merkley, a co-sponsor, urged the White House to support strong consumer protections. He is to be applauded, with others who pushed this reform.

The CARD (Credit Accountability Responsibility and Disclosure) Act will end practices that wipe wallets clean of green for families already in economic crises.

Credit card companies have been blitzing consumers with new practices and fees. Recently they have increased late and balance transfer fees, applied fees for non-use of cards and increased minimum payments. Those fees are substantial, making it nearly impossible for those struggling with large balances to pay them down.

The Federal Reserve has issued new regulations addressing some abuses, but those reforms would not take effect until July 2010 - too late for many consumers debt-ridden because of the economic crunch.

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

Prohibiting "universal default" on existing balances, the practice of raising interest rates for actions unrelated to the card in question;

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 by mail, Internet or other;

Halting 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; and

Limiting the aggressive solicitation of young people.

Are these regulations enough? Probably not. But they are a start. People need help to gain footing on a narrow credit cliff.