WASHINGTON, D.C. – Last week, Congressman Silvestre Reyes (D-TX) voted to support H.R. 627, The Credit Cardholders’ Bill of Rights, a bill that would level the playing field between card issuers and cardholders by applying new common-sense regulations that would ban retroactive interest rate hikes on existing balances (except when payments are more than 30 days late) and double-cycle billing.  It would also increase the amount of advance notice that is given to cardholders so that they are equipped with the information they need before an impending rate hike takes effect.  The measure passed by a large bipartisan majority in the House of Representatives by a vote of 357 – 70.  The bill now proceeds to the Senate for consideration. 

“This critical legislation will have a direct impact on the thousands of credit cardholders in El Paso,” Congressman Reyes said.  “I have heard from many people in the community who pay their credit card bills on time and use their lines of credit responsibly but are still hit with unfair fees and interest rate hikes.  These types of deceptive practices make it very difficult for people to get out of debt and it is time to put an end to these gimmicks that harm consumers.”

Under this legislation, credit card companies would be prohibited from charging “over-the-limit” fees when a cardholder has set a limit or when a preauthorized credit “hold” pushes a consumer over their limit.  The legislation also prevents companies from charging a fee when consumers pay their bill over the phone.  In addition, it requires credit card issuers to allocate payments made in excess of the minimum proportionally or to the balance with the highest interest rate.  This bill would also extend the due date to the next business day for mailed payments when the due date falls on a day a card company does not accept or receive mail, such as Sundays or holidays. 

Credit card companies would also be prohibited from knowingly issuing cards to minors under the age of 18. Many young people who are lured by low introductory rates get saddled with credit card debt that often takes years to payback.

In 2008, credit card issuers imposed $19 billion in penalty fees on families with credit cards, and they are expected to reap even more this year.  According to the Government Accountability Office, credit card debt in the U.S. has reached a record high – nearly $ 1 trillion.  Almost half of American families currently carry a balance, and those families on average had about $7,300 in outstanding debt in 2007.  One-fifth of those who carry credit card debt pay an interest rate above 20 percent.  Many families are already struggling to make ends meet with the current downturn in the economy and it is critical that these types of unfair practices that make it difficult for consumers to get out of debt are prohibited by law.  

For more information on this and other bills in Congress, please visit www.reyes.house.gov.