The Credit Card Holder’s Bill Of Rights Is Finding Massive Support in the Senate

And now it is the United States Senate’s turn to weigh in on the so-called credit card holders bill of rights. Senate Banking Committee Chairman Christopher Dodd of Connecticut is trying to get the legislation passed this week. President Barack Obama, who already has publicly lobbied for credit card reform, would like the bill to be on his desk no later than Memorial Day weekend.

The public outcry of credit card companies arbitrarily raising insurance rates on account holders has become too loud to ignore. The Senate also proposes that potential cardholders under the age of 21 must either show that they have the financial means to support having a credit card, or have a parent or guardian act as a cosigner. There is also talk of capping interest rates at 15%.

Quite predictably, the lobbyists for the banks and credit card companies are fighting the new legislation. The American Bankers Association are on record stating that the reforms would infringe upon their ability to grant credit for consumers when the Americans are in need of the most. A part of the written statement reads as follows: “the bill will have a tremendous impact on the ability of consumers, small businesses, students and others to get credit at a time when our economy can least afford such constraints.”

As you might imagine, the arguments are getting little if any sympathy. They may actually be further alienating themselves. Sen. Charles Schumer of New York chastised credit card issuers for charging such high interest rates when the overall interest rates are currently at record lows. Credit card reform has already passed the House and now it looks like both Democrats and Republicans will overwhelmingly pass it in the Senate as well.

A major bone of contention is the practice that is known as universal default. Universal default is the tool that credit card companies use to raise interest rates when an account holder is late in paying their bill. Not just their credit card bill, but any bill. The Senate’s version of the credit card holders bill of rights would restrict the raising of interest rates to people that are late 60 days or more paying a bill.

It should be noted that the legislation will not restrict credit card issuers from raising interest rates on future purchases if the credit card holder is late making payments and shows signs of being a credit risk. They must provide the credit card holder 45 days notice before rate increases will go into effect.

There is also talk of capping interest rates at 15%, the same as it is for credit unions. Sen. Bernie Sanders of Vermont has said that he will author an amendment to the bill requesting the cap. Likewise, other senators have stated that they support putting a ceiling on interest rates.

It will be interesting to see what the bill will look like in its final form. We will keep you abreast of any and all developments that affect this important legislation. You can bet that there will be some tweaks and changes along the way.