Credit Card Reform Act of 2008 – Congress to the Rescue

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Update: The new credit card law goes into effect in February 2009. Here’s an analysis of how it will affect balance transfer offers.

The House and Senate last week introduced two bills aimed at protecting consumers, especially young consumers, from “skyrocketing credit card debt, unfair credit card practices, and deceptive credit offers.” Senator Menendez (D-NJ) introduced the Credit Card Reform Act of 2008 (S2753–pdf download), and Representative Maloney (D-NY) introduced the Credit Cardholders’ Bill of Rights Act of 2008 (HR 5244–pdf download). Although both bills have there own nuances, let’s take a look at the Senate’s version.

Credit Card Reform Act of 2008

The Credit Card Reform Act of 2008 provides for the following provisions (as taken from a letter written to S. Menendez by various consumer organizations):

  • Consumers under the age of 21 would be allowed to choose whether to receive credit card solicitations. Card issuers could only solicit young consumers if they receive affirmative consent in advance.
  • Card issuers could not use the widespread practice of charging higher interest rates on balances incurred before a rate increase went into effect.
  • Credit card issuers could not alter credit card agreements while they are in force without specific written consent from the cardholder. This will stop issuers from giving themselves the right in cardholder agreements to increase interest rates and fees “at any time, for any reason.”
  • The bill would require that penalty fees be reasonably related to the costs that credit card issuers incur because of a late or over-limit transgression.
  • Credit card issuers could not increase a cardholder’s interest rate based on adverse information relating to other creditors they find on the consumer’s credit report.
  • Card issuers would be required to limit penalty interest rate increases to 7 percent above the previous rate if a consumer fails, for instance, to make a payment on time.
  • The Act would prohibit late fees on payments that have been postmarked by a designated date.
  • The bill prevents issuers from offering credit or raising credit limits to consumers unless they determine that the consumer will actually be able to make the scheduled payments based on their current income, obligations, and employment status.
  • The bill requires lenders to make a firm offer of credit that includes specific — not deceptively low — terms, including the interest rate, fees, and credit line.

So is the Credit Card Reform Act of 2008 good or bad for consumers?

Let me say at the outset that this legislation is a typical beltway boondoggle. Credit card debt is up, housing is down, so Congress goes after the evil credit card companies. Never mind about the consumer who spends every dime he makes plus another 25% or so. Should fraudulent and deceptive practices be targeted? Absolutely, and we have plenty of laws and regulations to do so. The problem with the legislation, however, is that it takes aim at the wrong problem while creating several others at the same time.

It is true that credit card companies can increase interest rates, sometimes excessively (although states already have laws limiting the maximum interest rate that can be charged). And yes, credit card companies charge fees for late payments that greatly exceed the actual damage they suffer from the late payment. But there is a simple solution to this problem–consumers can either use the credit they have responsibly or not get a credit card in the first place. Are there circumstances truly outside a consumer’s control that causes them to pay a credit card bill late? Probably. But do we need federal legislation to tackle that problem?

This legislation won’t stop credit card companies from making the profit the market allows them to make. What it will do, however, is change how they do it. If you limit a credit card company’s ability to increase rates, they’ll just increase the starting rate. Balance transfer credit cards and cash back credit cards will probably be affected, too. The point is that credit card companies make what the market will bear. Apart from stopping deceptive and fraudulent practices, the government shouldn’t get in the way of the free market.

Here’s my question to Congress, why don’t you enact the Consumer Reform Act of 2008? Here would be its salient points:

  • A consumer’s total used and available credit on all credit cards may not exceed an amount equal to 20% of their gross annual salary;
  • All credit card charges must be paid in full before the next billing cycle except where (1) the interest rate charged by the credit card company is 0%, or (2) a true financial emergency prohibits payment of the full charges; and
  • All high schools must offer and all high school students must take a course on personal finance, including how to use credit cards responsibly.

Do credit card companies take advantage of consumers in financial crisis? Sure. Should this be stopped if it constitutes fraudulent or deceitful practices? You bet. But blaming the credit card companies is, in my opinion, pointing the finger in the wrong direction.

So what do you think?

Now it’s your turn. What do you think of the Credit Card Reform Act of 2008?

Published or Updated: June 12, 2013
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Philip says:

    While I think you have hit the nail square on the head when you say that it is mostly on the consumer’s shoulder’s to decide if a credit card it right for them, I think that you are holding a double standard when you suggest that the government should force the consumer into rules about how much credit we can take and the like. I agree with you on the personal finance classes: they should be part of all high school curriculum requirements, but the federal government has no legal power over the state run education system (NCLB is the exception–an exception outside of the spirit of the constitution). If any government should do something about the credit woes of the US, it should be the state governments because the federal government is highly bound by the constitution into very specific roles (most of which it is overstepping, however). I think your ideas can also be applied to the loan crisis facing irresponsible homeowners lately as well. In my opinion, all governments, but especially the federal government, should be more considerate of the moral hazard principle. America was not founded on the backs of their government: let the people do as they wish, but pay if they make a poor choice.

  2. Taylor says:

    Check it out… you can vote on this legislation and have your vote sent direct to your reps. That’s pretty cool :)

  3. DR says:

    Philip, I completely agree. My “proposal” was a (lame) attempt at humor, but to underscore how silly I think much of this legislation is.

    Taylor, thanks for the link, that is cool.

  4. Brian says:

    After reading the following “prevents issuers from offering credit or raising credit limits to consumers unless they determine that the consumer will actually be able to make the scheduled payments based on their current income, obligations, and employment status. ” I can say is this will follow the housing crisis as people take out “NO Doc Credit Cards” Government creates more problems then it solves.

  5. Dima says:

    Ha! That was a good one about the consumer reform, DR, made me laugh for a bit :) Let also let the market do it’s thing instead of bailing out Bear Sterns with our money… Nah, those things would make too much sense and only the bad rich people can understand them.

    • DR says:

      Dima, now you’re making me laugh!

  6. Jim says:

    The thing we don’t do any more in this country is strike. We have become a passive society to our detriment. What we need to do is strike on the credit card companies. By that I mean, don’t pay. If 1 million plus high balance, high credit rate people default in unison it would compound the mortgage and credit crisis to a point that would exact real change.
    Look at congress scramble to do something about the mortgage crisis. See banks crumbling due to deceiving practices in mortgage sales. Credit cards are even more sinister.
    It’s not legal to not pay. Some would say it’s a lack of responsibility. What I suggest is a strike. Take action.

  7. Truefire says:

    The Credit Card Reform Act of 2008 is a good thing. I moved my finaces to a credit union eight years ago. Now that I know what quality service is, I realize what a mistake is was to use the Bank of America. For 22 years. I had to get on the phone with B of A nearly every single month to adjust my account.

    I think public banks are for loosers. Anyone stupid enough to use one is probably stupid enough to need legal protection.

  8. Jan says:

    I do not know who is sponsoring this website. However, I find it interesting that the write does not understand what an adhesion contract is.

    Credit card contracts are adhesion contracts. That means, it is a “take it or leave it” proposition. With this economy, more consumers need fair lending practices.

    This bill is fair. It is targeted to banning deceptive practices, that consumers are not even aware of – until too late.

    Anyone believing that the playing field is remotely balanced does not understand what has happened with adhesion contracts. The consumer has no choice but to accept horrible terms, if he wants credit. And the terms have increasingly become not only outrageous but deceptive and hidden.

    It is time for reform and reasonable regulation of credit card companies.

    Urge your legislators to support this bill.

  9. Jan says:

    While I am on this point – intelligent people understand why regulation exists.

    Only the misinformed have bought into the far right wing’s definition of a “nanny state.” Only by treating you as idiots could this crowd have a chance at convincing you that it is a bad thing to create a more even playing field, and require fair contract terms when one party has significantly more powerful bargaining power.

    Think again. Consumers are misinformed NOT because they are stupid but because credit card companies have become highly skilled at manipulation and deception. That must stop.

    This is a good bill. Urge your legislators to pass it.

    • DR says:

      Jan, as a trial lawyer for more than fifteen years, I can assure you that I know what a contract of adhesion is. Furthermore, contracts drafted by one party, such as a credit agreement, are interpreted in favor of the consumer where any ambiguity exists. There are state and federal consumer protection laws aplenty in this country. Add to that the threat of class action lawsuits, and I believe we consumers are more than covered. The problem with consumer credit card debt, by and large, is not the credit card companies. It is the consumer. We need to stop thinking like victims and start taking responsibility for our own actions. While today such thinking may be labeled “far right wing,” years ago it was called being an adult. Funny how times change.

  10. Medieval Credit Card Law says:

    Every owner of each credit card company which participates in such horrid practices should each be taken, tied to a cross, made to march through the streets until they get to town square, where a platform is set up. They should be taken, propped up on the platform and then cut from sternum to pubic bone so as to let their entrails fall out. Then, with two swift swoops, one severing the entrails from the esophagus and one severing the entrails from the anus, let the entrails drop on the platform before the dying eyes of the credit card company ceo/owner. Now swiftly, the entrails should be doused with a highly flammable liquid and set ablaze, all before the credit card company owner, while still aware of what is happening. Once they pass out, the body should be taken and each arm and leg tied to a rope and each rope tied to large horses, all facing in opposite directions. Once secured, a gun fired into the air so as to cause all four horses to charge in four separate directions, leaving behind the severed torso of the credit card company’s owner.

    This will send a message to other credit card companies to treat their customers with the utmost dignity and respect.

    • DR says:

      Medieval Credit Card Law, my specialty is not constitutional law, but I’m pretty sure this would run afoul of the 8th Amendment.

  11. Will says:

    Seems I read that in Italy they limit the credit cards from charging over 12% interest. I think the US should take the same steps. It’s good for the consumer and it is good for the credit cards. Most Credit card companies make matters worse. They see your in trouble, your having trouble paying, so bam they hit you 29% interest, $40 over the limit $40 late fees. Where is the common sense in that?

    If the consumer is having trouble paying the Credit card companies should be encourage to work with them to prevent bankruptcy. But greed kicks in and they stick the consumer for all they can.

    This causes the consumer to get into more trouble, defaulting on more loans. Getting more credit to pay off the bad. While this legislation may be a step in the right direction, it need to go further. The congress needs to stop letting Credit Companies become Loan Sharks.

  12. MR says:

    DR, I am more than happy to pay my debts. Until 9/11 like many other legal Americans I was successfully employed. For 2 years post 9/11 I was unable to find work in the same field making the same money. Yes I used/abused my credit cards not for vacations or a new car but to pay for rent and food. In 2003 I once again became successfully employed and earning a higher than average income. Unfortunately in 2008 I am still buried in debt. I could have opted for bankruptcy but believe my debts should be paid. Every month for the last 5 years I have paid my credit card bills. The interest rate is 29%. I have tried over the years to negotiate a lower rate. Chase/BofA/Discover claim because those accounts are closed I am not eligible for a lower rate. Even with a 10% or 12% rate credit card companies would still make billions. The high interest rates are ourtrageous. It has been almost 10 years of working very hard and struggling. I guess it’s time to call a bankruptcy attorney.

    • DR says:

      MR, it sounds like you’ve worked hard to pay your debts. I am surprised that you weren’t able to either negotiate a lower interest rate or refinance the debt. A reputable bankruptcy lawyer should give you sound advice. Best of luck.

  13. Jo says:

    I have no idea if anybody is still reading comments about this, but I just came across this after spending some time on the phone trying to get some relief regarding one of my fiance’s credit cards.

    I know that we like to think that the reason that people have credit card debt is that they are irresponsible spendthrifts, and that certainly is true for many people. But….

    I often wonder what percentage of credit card debt is accumulated due to unemployment, reductions in income at the same company, health care costs, and major home or car repairs. It is nice to think that everybody has a nest egg to pay for these things, but a couple of months of unemployment, a permanent reduction in income, serious health problems or big repair bills can make a huge dent in the most reasonable nest egg.

    My fiance had no credit card debt in the spring of 2005. Nada. Unfortunately, he works for a company that is reducing pay across the board by playing around with various income plans. He has seen his income go down since 2002 as have most full-time workers for his company.

    Now, he should be moving on, but he’s 55, a long-term employee and he now has health problems. He missed two months of work in 2006 due to ongoing health problems, and three months this year due to serious surgery.

    He’s incurred about 8K of dental work over those three years (No, he did not neglect his teeth.. he’s always seen the dentist for routine visits.) He has also incurred health care deductible costs. And he has kept his old car… finally paid off in 2005, but an old car is an old car… they break down and they need to be fixed. No, public transportation is not an option for him to get to work.

    Finally, we’ve had the usual home repairs… problems with hot water heaters and furnaces. And to just load it on, we just had a serious natural disaster and we are now in a FEMA disaster zone. Yep, the serious surgery, the car breakdown, and a FEMA-sized disaster all in the same year. We still don’t know if we will get anything from our insurance or from FEMA… we should, but we don’t have that money in our hands. And we had to get a new water heater and furnace and pay for them now.

    I’ve been helping him with some of his bills, but there’s a limit to how much I can help him…. my car just broke down!

    Do we live high on the hog? Nope, about once a month we go out for pizza. The loan-to-value on our home is less than 50%, even with falling home values. We have no new furniture nor much in the way of new clothes. I need new glasses and he needs shoes… we’re waiting.

    He’s back at work full-time, but he can’t keep up with those credit card payments. We are trying to work things out with his creditors, but it is unclear as to whether or not he will be able to survive without going into bankruptcy. A home equity loan would be nice, but with his current income, our credit ratings not that great due to his health and employment situation, and the current credit situation, it’s doubtful we will be able to get a home equity loan, even with a 40-50% loan-to-value home.

    So…

    I think it is always easy to be smug about people with credit card problems. But unless you’ve got 100,000 grand sitting somewhere and an extra income to tide you over any gaps in employment, any of us can be stuck in credit card hell within a year or two.

    I think this bill is basically a good idea.. it hasn’t moved of course, and Googling the bill shows that banks were lobbying against it (not much of a surprise). But credit card debt is part of the whole house of cards now, and it isn’t being addressed… because of the idea the credit card debt is tied into irresponsibility. Well, not always. As more people are laid off, as more companies find more ways to reduce their employee’s income, as more stressed-out people wind up ill, credit card debt will just keep making things worse.

    We need more fair practices in credit card lending.

  14. Paul Davis says:

    Whole thing is moot, credit cards died with passage of the bill two years ago, and the corpse simply requires burial.

    Just start from a simple premise, people are not fools! Got that? Then follow this, the changes in the bankruptcy law changed credit cards from unsecured debt to secured debt, secured by the future earnings of the card holder. Such being the case, credit cards are no longer a good deal, and they are now being paid off and shunned by the vast majority of the population, including myself, who has paid off three in the last two years. One more to go and no more, apart from a tiny balance card I use for ordering over the internet, so predators don’t have a line on my bank account.

    To put it simply: Unsecured debt at 12% = Great deal, 16% Ok deal, 23% barely tolerable. Secured debt at 12% = barely tolerable, over that it’s insane. By pushing for this bill, credit card companies cut their own throats. It also doubtless increased the mortgage crisis, since you can’t walk away from “unsecured” debt and keep your house now, people walk away from the house and work on paying off the formerly “unsecured” debt.

    Horrible law that actually will have a good effect in the end. And I cry no tears for the credit card sharks.

    Doubt any of this? Go check the facts, come back and prove me wrong. LOL. Be sure you check how much AMEX is making now, it’s pretty funny.

  15. tomtrail says:

    Pass credit card reform act of 2008 – Congress to the rescue thank you, tom trail

  16. Dana says:

    Advanta recently raised my business credit card interest to 31%! I have almost 10K in business debt on the card and have been a customer for over 4 years. My payments have been on time. There is no reason for this interest rate except outright GREED! I called to negotiate a lower rate and a supervisor told me “no other interest rate is available.” Avoid ADVANTA and please let this credit card reform act of 2008 pass!

    • DR says:

      Dana, credit card issuers have been raising rates as the credit crisis spreads to the card industry. While I haven’t experienced a rate increase, if I did, I’d look to transfer the balance to cards that offer 0% introductory rates on balance transfers.

  17. Jenny says:

    I’m writing a research paper on credit cards for finance class and I must say, this is by far one of the more interesting/entertaining things I’ve read. Thanks!

  18. dennis mc namara says:

    It is about time. the former gov. of the state of S.D. who started all this in 1984 should be prosicuted to the full extent of the law.I suggest everyone of you out there write your pbs sta. and get A copy of THE SECRET HISTORY OF THE CREDIT CARD. Aired on PBS recently.FRL 72305.FRONTLINE.you can not keep hiding your heads in the sand and think someone else is going to make it right.Take the time to voice your opinions.If one person beefs ,he or she is just a beefer but if we all get involved it will make a difference.Jesus Christ stood alone look what happend to him!

  19. AgentG says:

    To Paul Davis: Simply wrong that credit card debt was changed to secured debt. The new law implemented a means test to qualify for chapter 7, and if disposable income was available, set up a payment plan under chapter 13.

    DR on advice to Dana: Poor advice to refinance the balance on a 0% apr offer. The reason is that rates are increasing for folks without other options, and if Dana had other options, Advanta would have not raised the rate to 31%. Also, a refinance adds 3% each time. The best advice is to pay off the debt asap.

    The card companies are tightening the screws and raising interests rates to the maximum possible, at a time when market interest rates are historically low. When the rates get so high, the debtor has no chance to pay off the principal, so what the card companies are trying to do is squeeze clients for every last drop of earnings. But this is an extreme and dangerous reaction, without any regard for what will happen next quarter. What this will collectively accomplish is economic disaster, as more debtors will have no other option than bankruptcy, thereby massively increasing the losses to credit card firms. But they are partially responsible by overreacting with massive rate increases.

    There is a name for excessive interest rates — usury. And it has been considered a moral travesty for hundreds of years. As in the case of subprime lending, we need stricter usury laws to save consumers, but most of all, to save the credit card industry from destroying itself. Look where market equilibrium got us in the mortgage debt market, is that what you really think is the best solution for credit cards?

  20. Phil Grove says:

    I took out a $15,000 consolidation loan with GE MONEY BANK , never missed a payment, always on time and paid the loan off way over a yr early. Twicw during my repayment period they lowered the available creidt limit as I paid the acct off, but only when I made big payments of a couple of thousand at a time. By the time I paid the acct off a couple of months ago my credit limit was only $1,000, what awy to treat a customer that paid an acct off early and on time.
    To top that off they also administer cards for Wal Mart and JC Pennys and low an bebehold I get coorespondence from GEMB on both those cards that the credit limit has been lowered. WHY? I have a balance of 32.00 on JCP and about $200 on Wal Mart. Plus they have raised the interest rates on those two cards which I will being paying off and never use again as long as GEMB has anything to do with them.
    You want to read some horror stories about Credit Card Co. go to Cosumer Affairs and Consumer Complaints web sites and you’ll be astonished what CCC do to people
    But. the thing that gets me is how they handle debt ,it’s so damn dumb, raise the interest rates and lower credit limit so people even have a harder time paying their accts, thus Banksuptcy, now how stupid is that. The CAongress passes a 700 billion dollar bail out and give boo-koos to the banks and they sit on it while charhing us outrageous interest rates-you know what they deserve to destroy themselves.
    Companies deal with recession with same stupidity as Big Corps lay off now those people aren’t spending which in turncauses more layoffs and more people are tightning up, not spending except for basic needs and thats causes more layoffs…Hell lets just lay everybody off that get the economy going , at least Big Business would subscribe to that. Morons!
    CC are the thief in the night that backstabs in every way they can think of, fees at Atm’s which once upon a time we didn’t have, over the limit fees, late fee etcetc I surprised they don’t have a Fart fee on most men for carrying their c-cards to close to that source.
    So spare me the crying towel for the CCC Dr.

  21. Prabhakaran says:

    There should be a conscious opposition to all types of Credit crads. The best family or the best Individual is the one one who learns to live withing his budget. There should be no Credit cards but only Debit cards with some flexibility allowing a loan of upto 20 % maximun.

    • DR says:

      Prabhakaran, you can use credit cards and still live within budget. I use them for the rewards and 0% introductory rate offers, not to live beyond our means.

  22. John Z says:

    The disturbing fact here is that the credit card comoanies ARE engaging in usery, bordering on loansharking. I was horrified to see my interest rate soar to 33% by the good folks at Bank of America who I would compare to Al Capone. My debt is relatively low but I don’t see my balance moving much due to the high interest rates. It would move nicely at 12% but it’s a lot harder at 33%. Total greed on the part of Bank of America with whom I have a personal and business account. Nice the way they treat their customers.

    I am a conservative Republican and I do blame the banks and mainly the credit card companies for the financial burden that are placing on the average American family. They get bailed out and don’t have to account for where they are putting the money??? Try getting a loan from them and not disclosing what you are using it for. All of the education in the world can’t protect you from twisted legal-eze and one sided contracts in which the lender can change the rules at a moment’s notice.

    I applaud the bill and would like it to be even more strict. Being Italian I used to think some of the mobsters that I encountered as a youth were bad people but they would never screw you as bad as the banks and credit card companies of today. It is a black mark on America when institutions that are supposed to help people, rake them over the coals with very little recourse offered to the average consumer. Who’s a worse criminal, John Gotti or Bernie Madoff? Gotti probably charged less loanshark interest the Bank of America or Capital One. It is time not only for congress to act but for the conumer to act with a number of lawsuits. And, of course, don’t expect any help from spineless lawyers.

    • DR says:

      John Z, the Fed just passed regulations similar to the credit card reform act. But on the downside, they don’t take effect until 2010.

  23. Deez says:

    Obviously the blogger probably went to college for finance and now is a consultant for some bank and adversely opposes the proposed bill. Let’s see millions of credit card users and like 5 major banks. For once can we do something for the people. We’ve bailed out banks for their mistakes and we have been getting rapped and pillaged for years by these same banks thru arm loans and bank fees, credit card fees, with minimal interest rates being payed to us.We are are were one of the wealthiest countries in the world but in actuality who really holds this money… 1 guess. So, to say that the consumers need to be taught how to manage our money while banks are allowed to run a muck is purposterous. As if most of us don’t already know about the fine fine print on the contracts. The cc contracts unfair from the start. They have the right to adjust anything at any time on those contracts… I don’t even think that fit the definition of a contract if you can change it after it has been agreed and signed by all parties but in the corrupt lopped sided court of the law it is legal.It absolutely make no sense NOT to govern these theives. There job is to make money and they will do it any way they can. Allow their cash cow to be something other than robbing the good, the stupid, brave, the lazy people of America and so on. Not to forget that I know some employees of banks that deliberatley hold back mail for a few days so they can apply fees to them. Online banking same way. They claim they didn’t get the payment on time when supposedly it is an instant transaction. I am not chronically late with payments. 2 times in the last 2 years or so. The other 2 lates were no my doing and probaly cost me over $1000 easy after all said and done. The whole banking industry needs reforming. And thats just for starters. Corporate America has had it grasp on us for long enough it about time we get a leg up.

  24. Deez says:

    F the banks, Need a loan…. http://www.prosper.com Legal legit peer2peer lending. Of course the banks are fighting it tooth and nail. They way the CC Companies treat their customers is a planned business model that obviously works and will continue to get worse unless we regulate. I agree with a post above mine. I think this bill is a too leanient banks have had it too good for too long. Lynch mob style anyone wanna pillage their plunder for a change of pace.

  25. phil baker says:

    There’s middle ground here. Late fees are confiscatory and being late is inherint in a working person’s life. Banks, from the beomouths like BofA to the little community banks out in farm towns, extort hideous fees and no, they won’t stop gunning their main profit center (consumer lending fees) to the hilt unless Uncle Sam jerks back their leashes a tad. A simple, one unanimous vote-in-each-house flat LIMIT on fees, say, to $10, PERIOD (instead of $30-40), then by God, our elected representatives will have represented us quite well, thank you. There’s no boondogle to fair representation by congressmen. Got any idea, though, on what to do with the hoards of banking lobbyists that hang around Washington like insects to light? Please fill us in with ideas.

  26. CHRIS says:

    Sounds Good

  27. vera says:

    I don’t like it. I like using credit cards and I pay on time every month but it is so unfair that when I make my payments I am paying a high finance charge and what comes off the princial is a very small amount. I think it should be the other way around. Most should come off the principal then the finance charge. The finance charge used to be lower and then suddenly it is more. This bill passed by congress does not help the little guy get these cards paid off. So the bottom line is this. I am paying $300. in interest on the card for the year and the approx. 100. comes off the principal for the year. This does not seem right. Is this usury?

  28. vera says:

    It seems that our representatives just won’t give us a break. It’s the same ole same ole.
    Nothingness. I can’t stomache to vote anymore.

  29. Chincia Kenner says:

    I do not think this will be enough. They need to include a law which prohibits the credit card lenders from falsifying their ledgers with false entries. These lenders need to be audited because they have violated the General accepting accounting principles. The application signed by the consumer for the credit card, is stamped on the back and turned into a promissory note. The transaction account is opened under the consumer’s name , but if there was an audit done on any of the financial institutions who specialize in captilizing on subprime loans. you would not find a debit to the transaction account equivalent to the line of credit. If the lender has converted your application for $500 unsecured credit limit. There should be a debit shown the opening journey in the amount of $500.00 posted to the transaction account under the customers name. This considered as fraud.

    If the transaction is not showing a debit, then there is no loan. The financial institution should not be charging you interest on a loan never issued. The lender is allowing the transactions to go through and pay up to this amount, without any cash showing in the transaction account. It is illegal for the finance company or bank to charge interest on money which they never funded. Not to mention, the interest rates. They charge interest rates which are higher than usury law limits for where the consumer resides. They should not be allowed to that either. IF the consumer signs the application while they are in the state where they reside, the law for that state will apply. For credit limit increases, there should also be a debit to the transaction account , and ledger which is equivalent to the dollar amount of the increase. None of the transaction accounts will reflect a debit being made to the account. So the finance companies must be able to approve, this cash was transferred to the account. If the consumer knew they did not have $500.00 they would not spend it. Next, fee harvesting. The FTC cracked down on several credit card lenders for fee harvesting, which is not listed in the new laws. Fee harvesting is where the lender has issued a small credit limit of $300.00 , and charged all of these fees to the account, where your available credit is now reduced to $75.00. This is more than half of the available balance. This is just another way to disguise an advance fee loan. Last but not least, Credit card lenders who have violated the usury laws and falisified ledgers by violating the general accepted accounting principles should not be allowed to report negative information to the credit bureaus or file a claim for the swap out insurance carrier. They should not be allowed to sell the debt to junk debt buyer or transfer those accounts to a new lender who has bought them out. They should be forced to write off those debts, and eat it. This is poor accounting practices and the consumer should not be forced to pay them for bad business. The punishment should result in the lender paying the consumer $1,000 for reporting false information to the credit bureau, $1,000 for sending the account to collections for invalid account, refund all interest applied to the account for the invalid loan. Notice, all the lenders who have committed violations, are now acquired by other lenders. Now those lenders absorbing bad debt. Now they need a bail out. They should not earn a bailout, unless they are going to clean up the mess, then they could earn a credit. But, there will never be balance until the lender is forced to due what’s write by cleaning up the practices, their books, and correcting consumer reports.

  30. Andy says:

    About time. Though, I think this will place a lot of added compliance strain on credit card companies As Sen Maloney said in a recent update to the bill – “A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees…. This bill levels the playing field between card companies and cardholders while fostering fair competition and free market

  31. david says:

    i have had numerous credit cards and lines of credit for many many years. both for my two corporations and personal.i’ll be 50 in march. i have always paid on time and usually pay over what i am supposed to, even in this economic downturn. every week now i receive letters from all of the credit card companies raising my % rates and or lowering my cap. the customer service managers say with the economic down turn blah,blah,blah. we the people are going through a recession as well, and didnt get handed a 700b bailout. the same banks that got the 700b are the same credit card co. that are now doing the above. free enteprise, sure i believe in it. i have a large inc. and a large llc. if i ran bus. the way the large lenders do i wouldnt be in business and or i’d be in jail! govt. induced cc reform….you bet. someone needs to put these modern day thieves in check! they created the mortgage crisis, by lending people $ they shouoldnt have, getting a 700b bailout and then pouring salt in the middle class taxpayers wounds by sticking it to us with higher cc rates. put all the lipstick on it you want, they’re still f—— pigs! and while all this is going on, giving themselves huge bonuses and parties for failed corporations! i’ve sent letters to my senator, rep, the vp and president and encourage everyone else to do the same. until the public outcry is lound enough they will continue to stick-it to the working middle class! david h

  32. CC defaultors deserve to die says:

    basically….dont use credit cards…..thats the only way….who asked u to get a mountain of debt…..which u cant pay up?

    u dont let a mountain fall on you and ask someone to take it off right? no one will have the ability….

  33. jmr says:

    Lets see. Since I am responsible, pay my credit card debt, can afford to do so and have paid religiously, never missing a payment, I should have my 9.9% fixed rate card unilaterally raised to a variable rate of 17.9%? And oh, by the way, the card companies tell you that you can opt out and pay off under the old terms, which is fine, but what they don’t tell you is, that doing so can damage your credit. And oh, by the way, the card companies also don’t tell you that by unilaterally raising your rates they can damage your credit rating. Either way you loose. Don’t use credit cards? Try making a major purchase without a credit history,

  34. Tony says:

    Now the credit card industry is feeling the wrath of Congress who have suddenly discovered, after years of happily taking corporate contributions, that perhaps the consumers – i.e. disgruntled voters – may actually be worth listening to. Alas, congress and the current administration have yet again gone too far and many prudent, hard working and financially careful Americans (like me) will end up paying the price for the misspending of others.

  35. billtill says:

    All this bill will do is foster an environment of less responsibility for those that are already irresponsible. If the government keeps holding the hand of everyone who gets themselves into a predicament and tells them that it is not their fault they will never learn anything.

    Tough love. Learn it and live it, unless you want to live like Venezuela, or Russia, or North Korea.

  36. Mary K says:

    It seems to me that most everyone here is missing the point. The majority of the posts have spoken of credit card debt that was unavoidable, due to some financial crisis. My question is: where was your money going before the crisis.

    “Living within your means” does not mean spending every penny that you make. It means spending LESS that you make and putting as much as possible aside every month to create that “nest egg” that will see you through the hard times. This means, shopping sales or, heaven forbid, buying things second hand (yes, it is possible to get quality second hand), spending less on food (eating out and pre-processed food are a lot more expensive than you think when compared with cooking from scratch), clothing, accessories, furniture, etc. For example, even with 3 adult males and myself in the house, I can still feed us all for under $300 a month. It is possible, and it really doesn’t take that much time.

    Even as college students, we (my husband and I) have never once had to pay interest on our credit cards. I could not even tell you what our interest rates are. Why? Because we do not use our credit cards unless we have the money in our accounts to pay for what we am buying (a novel concept, I know). We don’t usually buy things we don’t need and, when we do decide to make such purchases, we discus whether the cost of these item are worth the time we would have to work to pay for them (the answer is usually “no”).

    To be honest, the responses to the article demonstrate the typical American lack of responsibility. What you need to understand is that the banks and credit card companies are BUSINESSES. They will do what they have to to make their profits (if you don’t like this concept, use a credit union; they usually offer the same services and are more customer friendly). If you want to hang the banks for “ruining the American economy”, you will have to get a lot of extra nooses for the non-baking companies that also participate in similar acts (toss in one for the government, as well).

    If you don’t want to be at the mercies of the Big Bad Credit Card Company, don’t put your self on the sacrificial alter. Don’t take a credit card so that you can have a little extra money. I you need a credit card to build credit, READ THE FINE PRINT. Discuss it with your banker. If they reserve the right to alter the contract, they probably will so be prepared. Save before the emergency. But, please, spare me the sob story about how these companies have done you wrong. I rather cliche…

  37. Gwen England says:

    I think ccc are a rip off. When i first got my card it was 5% for a few months then it was agreed to go to 9%. When i sent my payment this month it was at 18.99% and its going up again. i’m going to pay mine off and cancel it real soon. I don’t owe them that much anymore,thank god.

  38. Penny Hayes says:

    What needs to change is penalizing consumers if they cancel a credit card. Right now if you cancel a card your FICO score is negatively affected. this should stop. We need reform in this crucial area now.

  39. leslie tetrault says:

    I was 4 days late making my payment and now they are trying to charge me 29.99% on my balance. I am not going to pay

  40. leslie tetrault says:

    I do not intend to pay this and hope more people will do the same

    • Ron says:

      Leslie, have you tried talking to a representative with your credit card company to see if they will lower the rate?

  41. Louise Walker says:

    I was charged a $25.00 late fee because my payment was received on July 15th and the due date was July 14th. Is this legal under the new reform?

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