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September 23, 2008

Credit Cardholders’ Bill of Rights Passes House
Today the U.S. House of Representatives passed HR 5244, the Credit Cardholders’ Bill of Rights Act of 2008. The legislation aims to "provide crucial protections against unfair credit card practices" according to its supporters.

These protections include:

  • Requiring credit card issuers to give 45 days notice before interest rate hikes can take effect.
  • Allowing lenders to raise interest rates on current balances only if minimum payments are late by more than 30 days.
  • Requiring credit card companies to mail bills at least 25 days before the due date instead of the current minimum 14 days.
  • Bars credit card companies from charging interest on already repaid debt, known as double-cycle billing.
  • Stops the practice of applying customer payments to lower interest rate debt first.
  • Requires all credit card companies to accept any payments as being "on time" that are received by 5:00 pm EST on the due date.
  • Forbids issuing credit cards to those under 18 years old with the exception of emancipated minors.

    The Federal Reserve and other regulating agencies proposed a package of many of the same rules in May. They hope to finalize their plan before the end of the year.

    The bills opponents believe Congress is interfering with these federal agencies ability to regulate the credit card industry. On Monday the White House, which opposes the legislation, released at statement saying, "Regulations are better suited to addressing these problems than legislation because they can be adapted more readily to changes in market conditions". The statement went on to say that the bill would likely result in "less access to credit and in higher interest rates for consumers".

    The Senate has yet to vote on the bill.

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