No more interest rate hikes
The House of Representatives today passed a bill aimed at helping consumers who have credit cards. The bill does not apply to other types of credit, such as installment loans.
The Credit Cardholders’ Bill of Rights protects against hidden fees and interest rate hikes. The legislation passed by a wide margin, 357-70.
More benefits of the bill
The Credit Cardholders’ Bill of Rights also places restrictions the amount of late fees credit card companies and banks can charge. The measure also prohibits retroactive rate hikes and giving credit cards to applicants younger than 18.
Unfortunately, if these measures are approved they won’t take effect until next year. The bill now goes to the Senate. ABC News says its “prospects appear promising.”
No more double-cycle billing
The Credit Cardholders’ Bill of Rights also bans double-cycle billing. This practice is also known as “two cycle average daily balance.” Companies that use this method charge interest on the current balance of the card as well as the average daily balance from the previous billing cycle.
This practice is not used by all credit card companies. And, if the bill passes, it won’t be used by any credit card companies.
Sooner rather than later
There is on regulation that would go into effect in 90 days if it is approved by the Senate. Credit card companies would be required to give customers 45 days notice before increasing interest rates.
Opponents’ last-ditch effort
Some legislators who opposed the bill tried to add amendments that would allow companies to raise rates, saying that rate restrictions on credit card companies could cause them to shrink their credit offerings. They argued that if companies aren’t allowed to charge higher interest for some customers, those customers would instead simply be turned away.
“We shouldn’t take credit opportunities away,” said Rep. Jeb Hensarling, R-Texas. “I just want consumers to have choices. I want there to be a competitive marketplace.”
The amendments did not make it into the final, approved version of the bill.
