The Credit Card Bill Of Rights Act, which was introduced on Thursday in the U.S. House of Representatives, would limit interest rate hikes and late fee penalties that credit card companies use to unfairly squeeze profits from customers. The bill is sponsored by House Financial Institutions and Consumer Credit Subcommittee Chairwoman Rep. Carolyn Maloney (D-NY) and Financial Services Committee Chairman Barney Frank (D-MA).
Among the key provisions of the “Credit Card Bill of Rights Act” are prohibitions on:
- Bait-and-switch interest rate and fee hikes for any or no reason at all during the life of the card;
- Assessing hidden and unfair interest rate charges by charging interest on balances already paid off;
- Unjustifiably maximizing interest charges by requiring consumers to pay off balances with lower interest rates before those with higher rates;
- Charging late fees when consumers mail their payments seven days in advance of the due date; and
- Applying certain unfair interest rate hikes retroactively to balances incurred under the old rate.
The bill has the support of several consumer advocacy groups, including Consumers Union, Consumer Federation of America, and the Center for Responsible Lending. The supporters point out, however, that the bill doesn’t address some of the industry’s worst practices like universal default or over-limit fees for transactions that are approved by the lender.