Credit Card holder’s Bill of Rights is in the way of becoming reality
Credit card holder’s Bill of Rights, which was proposed by the Federal Reserve Board, National Credit Union Administration and Office of Thrift Supervision together in May, 2008, has been passed in the house on 23rd September, 2008. So, it can be said that the bill has completed half of its journey. Now, once the bill is passed by the Senate and signed by the president of US, it will become a law.
Amendments proposed by the bill
The bill is going to help several credit cardholders as it will prohibit the credit card companies from taking predatory actions. The credit card holder’s Bill of Rights will introduce several amendments to consumer credit laws, specifically in the FTC Act and the Truth in Lending Act.
Amendments in FTC Act
- According to the Bill of Rights, the credit card companies will no longer be allowed to calculate the financial charges using the double billing cycle method
- Credit card providers will not be able to apply increased interest rate on the pre-existing balances of the credit cards.
- Credit card companies will not be able to allocate credit card payments in such a way that maximizes the interest rates.
- Credit card billing statements should be sent 21 days before the payment due date.
- If the credit limit of a credit card holder is exceeded due to hold, then the credit card company cannot apply credit limit charges.
- The fees charged on sub prime credit cards should comply with certain limits.
- The credit card companies should give the full disclosure of requirements that are required to qualify for the promotional rates, offered by them.
- If the credit card provider introduces promotional rates, then the rates should be applied at first to the higher rate credit card balances.
Amendments in the Truth in Lending Act
- According to the Bill of Rights, if the credit card company receives the mailed credit card payment by 5 p.m. on the payment due date, the it will be considered as on-time payment.
- If the credit card payment is received on the next business day after the weekend or after a holiday, then the credit card companies should consider it as on-time payment.
Obama Presses US Congress to Approve Credit Card Reform
President Barack Obama urged US Congress to approve the credit card reform bill. This was in view of the rising malpractices in the credit card industry during the present state of economic slowdown. The idea is to protect the consumers from hidden costs, unexpected rate hikes, unjustified penalties and credit card fraud. The bill is going to be signed by Obama on May 25, 2009.
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