New Effort Under Way for Consumer Protections on Credit Cards

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New Effort Under Way for Consumer Protections on Credit Cards
By Phil Mattingly and Kate Davidson, CQ Staff


Lawmakers are making another push to strengthen protections for credit card holders, hoping they will have a better chance of success this year because the economic crisis has put the financial industry on the defensive.

While the House passed legislation last year putting restrictions on the credit card industry, a similar measure in the Senate proposed by Sen. Christopher Dodd, D-Conn., never even made it out of the Banking Committee, where he is chairman.

Dodd already has made more progress this time around.

The Banking Committee on Tuesday voted 12-11 to approve a bill (S 414) that takes aim at several practices that consumer advocates consider predatory — and that the industry defends as necessary to ensure the wide availability of credit.

The bill would:

• Bar “double-cycle billing,” the practice of computing interest charges on outstanding balances from more than one billing cycle.

• Prohibit “universal default,” in which card issuers raise a cardholder’s interest rate if the consumer has a flawed record with another creditor, even if the cardholder is in good standing on the account in question.

• Require credit card statements to be mailed at least 21 days before the bill is due, a week more than currently mandated.

• Prevent credit card issuers from changing the terms of a credit card contract as long as the holder remains current on payments.

• Increase the information disclosed to customers in their monthly statements.

Dodd said his bill is not “anti-credit card” but rather is designed to prohibit practices that pose risks for consumers and the economy. “Today we can send a clear message to these companies: These abuses must end,” Dodd said.

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