The Government is trying to pass legislature that will prohibit credit card companies to increase their interest rates on consumer accounts. The bill has recently passed through the House of Representatives and soon will go to the Senate floor to be considered.
On Thursday the House of Representatives passed legislation that will prohibit all credit card companies from performing some of their most common practices that can leave consumers feeling like they can’t keep up with their monthly payments. The bill, which was supported by 252 Democrats and 105 Republicans passed by a 357-70 vote and now will move on to the Senate floor for a vote.
President Barack Obama has been pushing for such a bill since he has entered office. Some other Representatives like Rep. Carolyn Maloney, a New York Democrat, have been trying to get a bill like this passed for years. Recently with the outcry of the American Public seeking more protection from the Government, many opposing Representatives have changed their position and now support the bill.
The Senate version of the bill is expected to be considered as early as next week and includes many provisions that:
· Require creditors to give consumers a written notice of any rate increase at least 45 days in advance.
· Bar retroactive rate increases on existing balances except for those more than 30 days late in payments.
· Require creditors to send out billing statements at least 21 days before the due date, up from the current 14.
· Bar creditors from issuing cards to most people younger than 18.
· Prohibit double-cycle billing, a practice that allows companies to charge interest on debt consumers carrying a balance forward have already paid on time.
The Federal Reserve Board is also in the process of issuing its own set of rules for credit card companies to follow that will take effect starting next year. Although these imposed rules are not as strict as the proposed legislation provided by the bill, any extra help seems to be greatly appreciated by troubled consumers who are having problems keeping up with the credit card bills.
It is said that close to 90% of credit card issuers are currently allowed to raise any interest rate at any time by changing the account agreement. They also may impose automatic penalty interest rate increases on all balances, even if the account is not 30 days or more past due. These allowed practices have played a major rule in damaging many consumers’ credit ratings. The proposed bill seems to be moving along very quickly and consumers may start to see some of the provisions to be enforced just 90 days after the bill passes.
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