Alan Grayson

(WASHINGTON) – Congressman Alan Grayson (D-FL) today praised the implementation of the Credit Cardholders’ Bill of Rights (H.R. 627).  Rep. Grayson helped to shepherd this bill through the House Financial Services Committee, and then voted for it in the House.  It contains several strict protections for consumers, including banning unfair interest rate increases, and forbidding abusive fees and penalties by credit card companies.

Congressman Grayson said, “Credit card companies will no longer be able to stick it to middle-class families in Central Florida.  These huge banks charged exorbitant interest rates, and used gimmicks to burden people with unnecessary fees.  These reforms will help hard-working people pay off their debt.”

The so-called “Credit CARD Act” was signed into law on May 22, 2009, and takes effect this week.  A recent report by the Pew Charitable Trusts concluded that unfair or deceptive credit card practices hurt families badly before this important law was enacted.  For example, interest rates climbed an average of 20 percent in the first half of 2009, on credit cards representing more than 90 percent of outstanding balances.

As part of the new law, consumers are now given the right to refuse to accept rate hikes, and pay off existing credit card balances under the old rate. Credit card companies also are required to give 45 days’ notice of any rate increases on new purchases.  If a consumer receives notice of a rate hike, he or she can now simply ask the card company to reverse the rate hike and close the account.

Additional provisions of the Credit Cardholders’ Bill of Rights (H.R. 627):

·       Account statements must be sent 21 days in advance of the payment due date.

·       Interest rate hikes on balances are prohibited.

·       Penalty rate increases for payments less than 60 days overdue are banned.

·       Charging interest on debts paid on-time is banned.

·       “Due-date” gimmicks, such as setting morning times for payments before mail is delivered or charging fees for paying a bill by phone or internet, are banned.

·       Promotional rates must last at least six months.

·       A consumer under 21 must demonstrate an ability to pay, or have a parent co-sign, to be eligible for a credit card.