Merkley: Credit Card Reform On the Way

Merkley: Credit Card Reform On the Way

Senate Passes Bill Ending Deceptive Practices and Hidden Fees

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 consumers.”

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 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 telephone, mail, internet, or otherwise;
  • 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.