Oh, this IS exciting.

Even more exciting will be seeing which legislators cut what parts of the bill, and what the final "swiss cheese" version is.

WOW, this is great....but. You knew that was coming. Here comes the cynicism.... So I doubt honestly that the Credit Card lobbyist are going to let this version make it even to a vote. The impact on the credit card industry and their free fee charging ways would be way to dramatic...like the recession isn't enough.

Prohibits issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions;

That's a good one. One thing I did with some excess cash I had recently was pay off 4 of my low limit credit cards, and I haven't touched them in 2 months. (that's amazing for me) I know Suze Orman says hold on to your cash, but in a way I am with saving $100 a month in minimum payments on those. Luckily none have slashed my limit yet. It's nice to see that people are paying attention to some of the ways credit card companies rip off consumers. Unfortunately they are a necessary evil.

Wow, if this miracle plan goes through, I'll be a happy camper!

@RStui: Yes, its a very very good thing! But I'll wait to break out the bubbly when the final version is ready for the signature.

I thank Chris Dodd for this... but i still don't like him and won't vote for him next election.

Too bad mos of the beneifts will be stripped out by the CC Lobby.

Mostly good... I'm not so sure on:

"•Requires issuers extending credit to young consumers under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt; or proof that the applicant has an independent means of repaying any credit extended;"

Honestly, if you are over 18, and since you are considered legally an adult and capable of making your own decisions, I don't think its fair to those 18-20 year olds who are actually RESPONSIBLE (there are some, trust me, I had a C.C. when I graduated college and never had any problems with it or any debt) to have to jump through hoops to obtain a credit card. I'm ok with making credit card companies be less shady, but arbitrarily making it more difficult for a group of people to obtain one simply because they're considered too stupid to deal with them themselves is over-reaching and becoming a little too nanny-state for me.

@jaydez: is there still a cc lobby? i thought we fired them all when we took over their banks.

i was really pissed off at dodd as well, but as the realities behind some of those backroom deals started to make the light, i've gotten over it.

he's one of the most powerful senators in washington & i'm his constituent. not voting for him doesn't seem very prudent...trading the 10th most senior senator for a freshman? how does that make any sense?

i think we just need to hold his feet to the fire for awhile. politics is politics. he's made some mistakes, but guaranteed we'll lose if he's not around next time they talk about closing down groton or shifting contracts from electric boat & UTC (hamilton standard, pratt whitney & sikorsky - all huge employers in CT).

@ilves: Just like you can't assume all people under 21 are irresponsible, you can't assume all people under 21 are responsible.

It's just easier to require this, because the majority of people under 21 are not independent, and are still under the authority (but not legally) of a parent or guardian. There's always the "as long as you live under my roof..." threat.

As somebody who comes from a family of Republicans (FWIW, I'm an independent), I just pray that the GOP reps don't do the 'knee jerk' and shoot this stuff down just because it was an idea brought about by a Democrat. I also pray no one -- D or R -- decides to water down the kool-aid. Please, no compromises!

I want some wording in there about preventing the decrease of credit card limits, and a clear reason for why a person's credit line would be slashed. There are plenty of responsible people who aren't abusing their credit lines, why are they getting punished?

How about making it so we can check our credit score at any time for free, and making it so we use a universal credit score that we all agree upon? You know, since our mortgage rate, auto rate, credit card rates, employment, etc all depend on it.

@ilves: I read that and didn't agree with it until I got to the "proof that applicant has a means of paying for it" part. They should require proof that the applicant can pay for it for everyone, not just kids under 21.

I only use credit cards for the cash back. I have no balance, so I couldn't care less about APR. What will happen to my benefits if this reform is passed?

@pecan 3.14159265: But an 18 year old is a LEGAL ADULT. Period.

@ilves: It's not arbitrary. For every one responsible person that gets a credit card in college, the number that grab a credit card for the freebie and end up graduating with debt and or horrible credit they don't need or fully understand is unreal.

The credit card companies know this - and they count on that, "but I'll be the responsible one!" mentality. Heck, there's that one guy that makes money in the MLM scam, right? So by that extension, it's a-okay!

The credit cards also count on the "you're too stupid" argument from others to get people to sign under the idea of not wanting to feel dumb. Because calculating your interest on your balance makes complete sense in this environment of arbitrary rate increases - who wouldn't expect to be charged the new interest rate on the old balance? Who wouldn't expect to be charged interest on interest? Who wouldn't expect to be charged interest on fees? Who wouldn't expect to have the card go through when you're close to your limit and then end up being charged multiple fees? Yes, it's innate knowledge you're born with...or that you can easily comprehend from the fine print of your cardholder agreement as you breeze through it at a Spring Break table on the way to the beach.

If you're a responsible person, your parents will sign, right? If you're really super-responsible, there are clauses in all of these for emancipated individuals - so just do the extra paperwork. That will give you all the genuine responsibility you need and allow you to get a card without a co-signer.

You can "nanny state" all you want, but this is a segment that's getting the present of horrible credit upon graduation. In exchange for what? A free cup cozy?

@Saboth: Seriously. It's completely ridiculous and unfair that we can't check this stuff for free at will, considering it effects our lives so much.

I would like to see something inserted into this bill to say that they can't continually move your billing date around, from the 5th, to the 3rd, to the 2nd, to the 1st, in hopes of getting you to miss a payment, when you assume that the bill is due on the 5th. Shady, shady GE Money.

@Featherstonehaugh:

Kiss them goodbye because a bunch of irresponsible idiots drowned themselves in consumer debt and now want the .gov to come and help them out.

@ilves: ok. here's the thing: credit card companies have a track record of making what would otherwise be considered "bad loans" (in terms of responsible lending guidelines) to people <21. i got my first credit card on my own when i had ZERO income. why? b/c i was enrolled in a university. there was an assumption that either my parents would pay my bill or i would be able to pay it at some time in the future.

this is what this provision is trying to stop. as long as someone under 21 has a means to pay, they can get a card, but if they don't have income, they won't be able to obtain credit without a cosigner. this is how things work everywhere else in the lending world (except maybe student loans). you can't buy a car without proof of income - why would any lender in their right mind issue you a $3000 credit line?

@nakedscience: & banks are required to make loans in good faith & according to guidelines that assure they are making loans responsibly.

making loans to 18-yo's with zero credit & zero income are neither in "good faith" nor "responsible". why cc banks have been allowed to get away with it for this long is beyond me.

@ilves: I get what they're trying to do -- credit cards to college students is a major, major problem -- but I agree. Either the age of majority is 18, or it's 21. Make up your freaking minds, federal government, and stick to it!

@ilves:

I also found this one rather troubling at first. I think the bill is really targeting full time college students who are not yet working. If you are 18 years old with a full time job, then that is the "independent means of repaying any credit extended"; which then means you could get a card without a cosign.

I actually don't think it's a bad idea. The whole practice of CC companies giving college students credit was based on their earning potential after graduation, but that whole dynamic has changed within the past decade. Few college graduates are getting those $75,000+ jobs upon graduation anymore.

@Saboth: i don't know if we need to go quite that far.

i'd rather they were required to disclose your score as well as your report when you're approved/denied for a loan (they do require this now with home loans).

a lot of consumers don't realize that the score is generally only a small part of the approval process used by lenders. it's imporance lies in the pricing of credit - interest rates are almost exclusively based on credit scores.

@nakedscience: But age doesn't equal responsibility, as we've seen with countless middle aged people who are in foreclosure and debt.

@Featherstonehaugh: Most likely nothing. Any increased fees will just be passed on to the retailers who are the ones that are really getting screwed by credit card companies.

Next up on Consumerist... "My Credit Card Company Cut My Limit and It's NOT FAIR! WAAAAAAAAHHHH!"

I swear I don't think I will ever understand why people need all these "protections" because all it will do it restrict credit. The "Young People" provision is a joke. Many people actually are independent at 18 and I don't think it should be up to the government to arbitrarily decide an age at which it is decided that one is now "responsible." As if Chris Dodd of all people should decide that!

People that pay late or have a higher risk of default SHOULD pay more in fees & SHOULD have higher interest rates. It's the way credit of all kinds works, be it credit cards, bonds, or other debt instruments. Otherwise the burden simply shifts to everyone else.

The one great suggestion I did see was the idea that your credit score should be public and free, at least once a year like the annual credit report program. It's important to have all your information at your fingertips. However, it's one's own responsibility to use credit responsibly. It's just not that deep; pay your bills on time or don't use a credit card!

I am a bleeding heart liberal commie pinko or whatever Rush is calling us these days, but I really think this act will have unintended consequences that will screw over more responsible users of credit.

@nakedscience: Or at least get a notification if your score materially changes.

@mrgenius: Well, it isn't fair of credit card companies to cut my limit when I've been responsible with it.

@pecan 3.14159265: That's what I fear will happen to a lot of folks. They'll cut your limit, which might lead in some cases a decrease in credit score. Which might lead to increase in interest rate, and so on.

My main point is that credit card companies WILL MAKE MONEY. It will just that more money will come from up the credit score chain.

@mrgenius: Promoting responsibility for one's own actions and allowing businesses to make decisions based on their own risk or profit? I don't think that you're as bleeding heart as you might think. :)

Regardless, I'm glad that this is something that everyone can agree on from a common sense point of view instead of a red or blue colored one.

It sounds good, but what about the pork and riders they'll no doubt shove into the thing?

@Eyebrows McGee (popping ~May 29): While I totally agree that 18 is the age when you become an adult, it's gotten to be a weird thing when people started going to college more. Since the government started giving need-based aid to students, they require that you put your parents' financial info on there because the parents are expected to pay x%.

Instead of limiting it to <21 years without a job, how about for everyone? I think it's fine for an unemployed person to receive 1 low limit CC, but it's when they're allowed ten of those that stuff like this has happened.

@pecan 3.14159265: A little off topic, but speaking of credit limit decreases, I had a funny thing happen to me the other day.

I got a letter in the mail from Bank Of America with whom I have a credit card, telling me that basically for one reason or another, my credit limit has been reduced to $5000. Five freakin' grand! I never knew it was more than $2500 to begin with! Also, I'm unemployed.

They could reduce it down to $500 and I wouldn't care; I rarely put more than a hundred bucks on there anyway. But this, this is just weird..

@nakedscience: Yeah, and about alcohol?

I'm not disagreeing with you in spirit (as I think the drinking age should be 18 as well) but the precedent exists.

@mrgenius: My brother hasn't been late with a payment in 22 years (and hasn't changed a job in 15 years) and has never missed a payment (a fact made far easier by the "take money from one of my bank accounts to pay the balance please" setups) and was late twice in that time frame (a whoops!, f*ck up) but they cut his limit in January from 30k to 15k on his Chase card. He doesn't really care too much, he usually only charges about 16k in expenses to it a month.

Fortunately that was a light month, and he only charged 11k. How much you want to bet the new limit would have cost him an overcharge? He didn't know his limit was cut until he got home and pulled out his mail.

Thank heavens for vacations in one way I guess.

HSBC is pretty dumb too, 3 days so an online payment can be processed? What are you using, a 1960's IBM mainframe that requires punch cards and batch processing?

@Inglix_the_Mad: Still waking up, never missed a payment in 22 years :|

Heh, you may be right. Don't want to get to OT, but to me there are big differences between things like, say, universal health care, and things like this. I find it a bit interesting that there has been so little coverage of Obama's health care proposal on this site, which strikes me as so much more pro-consumer than the credit card bill (credit after all being a privilege). So I am a little bleeding heart.

I just think this bill will end up hurting more than helping many consumers in the long run because the banks will be incentivized to basically take their ball and go home, leaving many without access to credit.

Years ago I worked for Citicorp credit cards. They had a program marketing to college students figuring those kids had a brain and wouldn't over extend themselves. The delinquency rate was about five times higher than the normal collection rate. That program got closed real fast. But in any event....NEVER, EVER co-sign for anyone even if they're your kid because odds are you'll get stuck for that bill. When I worked for Household Finance just out of college we used to call a co-signer a "schmuck with a pen."

I wish they had the "safeguards for young people" 10 years ago. My credit score would be AWESOME now!!

@ilves: I believe that everyone should have access to credit by default (innocent until proven guilty). If you don't have credit, there are some things which are unnecessarily difficult to do.

But, on the other paw, students don't always have an income. And credit is based on income.

So, if someone is willing to vouch for you financially, you should be able to learn to use credit responsibly. Yes, students are going to screw up and max out their cards. That's part of learning.
The fallout has to be limited because it's going to affect the 'patron' financially in addition to the beneficiary's credit score.
So, on that basis, I'd agree with this safeguard but open the opportunity to everyone.

@RStui: which legislators cut what parts .

That is the question . Who is or has been aiding & abetting these credit card companies .

@nakedscience: When 18 year old Americans can legally drink beer, I'll buy that argument.

On the other hand I don't want to see making this or any other legislation/regulation turning the rountine/daily transactions in life into a job interview .

In other words these credit card companies are going to manipulate,bend,twist,contort and fracture these new laws to their advantage . I still think there is too much emphasis on the credit score but it has become a cottage industry in itself . Just the like the debt consolidation/credit counseling industry .

Pretty much everything in this bill has been standard in the UK for many years. And the industry still manages to gouge the public.

This is the exception:
•Requires promotional rates to last at least 6 months.

I can't see the value in this. I'd prefer to see promotional rates along with promotion length in the same sentence.
So "0% APR" would have to be "0% APR for 6 months".

And I'd drop it completely for an easy way to transfer your credit line (not the same as a balance transfer).

If you need to be 21 to get your own credit card or buy beer, then you should need to be 21 to buy guns, cigarettes, vote, or serve in the military.

Pick an age you consider someone to be an adult and stick by it. I'm tired of this sliding scale crap.

@IT-Chick: Problem is that not all transactions clear in real time. Without real-time clearing there is no way to confirm an over the limit situation until the transaction is actually posted.

OTOH, not many companies do offline CC anymore, it's just too risky.

@ShraddhaJobnik: I agree, and I'm more of a Republican too.

I especially like the part about protecting young people from irresponsibility. I'd go even further and require schools to teach classes on money management and basic economics.

What about ditching the binding arbitration stuff too?