Thursday, September 25, 2008

HOUSE PASSES CREDIT CARD MEASURE

DMI - While congressional leaders, administration officials, and presidential candidates debate how to pull the economy out of crisis, the House on Tuesday passed an important measure to keep American consumers out of danger in the first place. The Credit Cardholders' Bill of Rights, though not as strong as other credit card consumer legislation, bans or limits several of the most devious practices employed by credit card companies, practices that tend to keep consumers mired in debt. . . . .

For years, the credit card industry has been increasing the amount and frequency of over-the-limit and late fees and imposing finance charges multiple times on the same balance. Cardholders were charged $33 billion in fees in 2007, an increase of 208% since 2002. Further, the industry employs guerrilla marketing tactics that sent 6.06 billion credit card offerings to American households in 2005 alone.

In brief, the final legislation . . .

limits the circumstances under which credit card companies can increase interest rates;

requires creditors to notify consumers of an increase in their interest rate at least 45 days before the increase takes effect;

prohibits finance charges on card balances accrued in previous billing cycles;

regulates how credit card companies apply payments to balances held at different interest rates.

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