In early May the Federal Reserve issued a series of new proposals designed to curtail some of the more egregious credit card industry practices, while also requiring card companies to better disclose their rules to customers.
As Federal Chairman Ben Bernanke stated, the proposed new regulations are “intended to establish a new baseline for fairness in how credit card plans operate. Consumers relying on credit cards should be better able to predict how their decisions and actions will affect their costs.”
Of course, the Fed’s new proposed regs would have been a lot more helpful if they came long before we got to our current national credit card crunch: More than $900 billion in outstanding card debt, much of it accruing interest at rates well above 15% and susceptible to arcane rules and practices that generate major fee revenue for the card companies.
Give the Fed
Your Two Cents
But I suppose we will have to be grateful for “better late, than never.” And the Fed’s proposed rule changes do indeed offer some solid consumer protections:
Congress Takes Hold of Card Problems
More action on credit card disclosure and practices may come from Capitol Hill where two bills in the House and Senate are focused on boosting consumer protections. Granted, this is just the sort of topic that scores well in an election year; but let’s cross our fingers and hope this is more than vote-pandering.
I was beginning to give up on Congress. A year ago it held hearings to learn more about credit card billing practices. No legislation ever came out of those hearings. The only small victory was that a few of the major credit card issuers hauled before Congress to testify tried to play nice by voluntarily rescinding their use of Universal Default. That’s the system whereby you can pay your credit card bill on time, yet still see your interest rate skyrocket if the card issuer happened to notice you didn’t pay any of your other bills-completely unrelated to your card company-on time. It looked like the credit card industry had succeeded in throwing this one bone to Congress and consumers to avert any more substantive changes to how the credit card industry is allowed to operate.
Then this past February, Representative Carolyn Maloney introduced the Credit Cardholders’ Bill of Rights Act of 2008. And then at the end of April Senator Christopher Dodd introduced the Credit Card Accountability, Responsibility and Disclosure Act (the C.A.R.D. Act). These bills include some provisions that are echoed in the proposed Fed regulations. Consumer advocates believe it important to build on the Fed’s regulations by having actual law in place that mandates consumer protections. (Laws are harder to change than regulations.)
I was especially interested in a few new items in the Senator’s bill that the Fed did not address.
Again, I encourage anyone who wants better disclosure of credit card fees and a push for a more level playing field to contact your Washington representatives and tell them what you think of both of these bills. This isn’t just a matter of telling your representatives you are annoyed with something; you have specific bills you can refer to, and ask their position on. Wouldn’t you like to know where your Representative and Senators stand on credit card reform?
To contact your Senators about the Credit Card Accountability, Responsibility and Disclosure Act, go here.
To contact your Representative about the Credit Cardholders’ Bill of Rights Act of 2008” (H.R. 5244) go here.