Remember all of that government debate about the credit card industry? Well, a piece of legislation that addresses the debate has been introduced in the House of Representatives and is currently before the Financial Services Committee. The bill requires several changes, including things like advance notice of interest rate changes.
Many people don’t realize it, but credit card companies have the right to change the terms of the credit card contract and to increase the fees the company charges unilaterally, according to Bob Lawless on the Credit Slips blog. This new legislation would give the consumer the right to receive notice of the change, then cancel the card and pay off the remaining balance under the old interest rate.
The legislation would, if passed, put an end to “Universal Default” which is a technique used by creditors to raise interest rates based on things like late payments to a utility or other account unrelated to the credit card.
The bill would also prohibit credit cards from being issued to minors without a parental signature and “submission of financial information proving the minor has independent means to pay,” or completion of a credit card counseling course.
There are a few other issues addressed in the bill, such as a requirement to disclose the late payment deadline and the postmark date requirement. This is an issue we get emails about all the time, you’d be surprised.
Another section would require disclosure in the credit card statement of how large the monthly payment would need to be in order for the customer to pay off the bill in 36 months. So head over to the Library of Congress website and give it a read. If you support this legislation… you know what to do! —MEGHANN MARCO
Credit CARD Act of 2007 [Credit Slips]
Credit Card Accountability Responsibility and Disclosure Act of 2007 [Library of Congress]
(Photo: Brett L)