Credit Card Holders’ Bill of Rights
Good news for credit card holders! Especially for people who carry a credit card balance. Legislation is about to be passed to control credit card practices. The new legislation has bipartisan support and a swift passage into law is expected.
The new so-called “Credit Card Holders’ Bill of Rights” is designed to:
- Enhance protections for credit card customers.
- Prohibit so-called double-cycle billing which eliminates the interest-free period for consumers who move from paying the full balance monthly to carrying a balance.
- Prohibit retroactive rate hikes.
- Ban the issuance of credit cards to people less than 18 years old.
- Customers must receive 45 days notice before their interest rates are increased.
- Clear explanation of credit card agreements instead of the fine print, which is hard to decipher.
The new laws will take effect a year after enactment. However, the new legislation that customer receive 45 days notice before their interest rates are increased would go into effect in 90 days.
According to a study by the law firm Morrison and Foerster; the new credit card legislation could cost the banking industry more than $10 billion a year in interest payments.
Currently, U.S. credit card debt is $963 billion, a 25% increase of the past 10 years. According to CreditCard.com, the average outstanding credit card debt for U.S. households was $10,679 at the end of 2008.
There are about 16,000 U.S. companies that issue credit cards. The largest lenders are Bank of America, Citigroup, Discover Financial Services, JPMorgan Chase & Company, American Express, Capital One Financial Corporation and HSBC Holdings PLC.
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