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Dear Neighbor
Today, President Obama signed HR 627, my credit card reform bill.
So if you’ve got a credit card, help is on the way-- and help is sorely needed.
When
I became Chair of the Subcommittee on Financial Institutions and
Consumer Credit in 2007, I began to draft the legislative language that
became “The Credit Cardholders’ Bill of Rights,” which first passed the
House last September, then again last month, and passed the Senate last
week.
I have to tell you, it was a long and bumpy road.
Some credit card issuers fought these reforms every step of the way—and
they were still at it as recently as Tuesday, claiming these reforms
will hurt consumers and result in increased interest rates and reduced
credit availability.
But who are they kidding? They’ve
already been cutting credit lines and raising rates as a result of the
overall financial crisis.
Let’s be clear about what
Congress and President Obama have done: we have banned practices which
the Federal Reserve has declared ‘unfair’ ‘deceptive’ and
‘anti-competitive’.
The first of these reforms—45 days’
notice of rate hikes and 21 days’ notice of your monthly balance—will
take effect in 3 months.
In another 6 months, the bulk of the remaining reforms will kick in, including:
-- A ban on interest rate hikes on existing balances;
-- A ban on so-called ‘pay-to-pay’ fees, charges just to pay your bill by phone, internet or electronic transfer;
-- A requirement that consumers affirmatively opt-in for an over-limit fee program;
-- A requirement that card agreements be posted on the web.
Wherever
I’ve gone in the 2 ½ years I’ve been working on this bill— in New York
or Washington or even, once, while I was on vacation with my family—
people have come up and told me their credit card horror stories. I
know my bill will help curb the worst of these practices and level the
playing field between card issuers and cardholders.
What’s
next? Well, the FDIC has reported that many major banks automatically
enroll customers in so-called “overdraft protection” programs which
incur median average fees of $27 for each overdraft. That means if you
swipe a debit card for a $3 cup of coffee, it could become a $30 cup of
coffee if you aren’t careful!
My bill on overdraft
protections would bring such overdraft “protection” plans under the
Truth in Lending Act, and require banks to have customers affirmatively
opt-in to protection plans, with full disclosure of fees and practices.
It’s already been the subject of a Subcommittee hearing, and I hope we
can move it through the full Financial Services Committee in the months
ahead.
It’s going to be at least as bumpy a ride as credit card reforms were, but I know we can make it happen!
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