House passes credit card bill
Posted: Wednesday, May 20, 2009 3:01 PM by Mark Murray
Filed Under:
Congress, Economy
From NBC's Luke Russert
By a bipartisan 367-61 vote, the House this afternoon passed the Credit Cardholder's Bill of Rights Act of 2009. It passed the Senate yesterday by a 90-5 margin.
Treasury Secretary
Timothy Geithner said in a briefing on Tuesday that the bill will provide "a more fair, transparent and simple consumer credit card market." The bill has been deemed consumer friendly by many leading consumer rights groups, and is aimed at cutting down the rising interest rates placed on credit card holders who are more than 30 days late. Here are a few highlights of what the new laws will do for Americans:
-- The bill would extend the grace period from 30 to 60 days before credit card companies could increase the interest rate on the consumer's balance. That effectively bans "universal default," which is the practice of raising interest rates after a customer is 30 days late. If the customer pays on time after the 60 days for six months, the credit card company must revert back to the old interest rate.
-- If the credit card company decides to increase the interest rate on its customers universally, it must give the customers 45 days notice before implementing the new rate.
-- The bill also calls for credit card companies to freeze the initial interest rate of the cardholder for the first year they have the card. And it prohibits credit card companies from charging cardholders a penalty fee when they exceed their credit limit, unless they specifically agree to the penalty in writing.
In the bill, Congress also makes a special effort to protect the credit rating of younger Americans. Americans under 21 years of age must have a co-signer who can vouch that the minor has means to pay the credit card bill or agree to be equally responsible for payment.
Overall, the bill strives to give cardholders a clearer picture of where the money is going. Under the new law, credit card companies must provide a clear detailed billing statement that does away with hidden fees and discloses any changes made in billing by the company.
In another twist today, the House offered two votes on the Credit Cardholder's Bill of Rights Act of 2009. One was for the bill itself -- and the other for an amendment by Oklahoma Sen. Tom Coburn that will allow loaded guns in national parks. The two votes allowed House members to distinguish themselves on the gun rights issue. On the House floor, Rep. Sam Farr (D-CA) vehemently spoke out against the gun portion of the bill, saying that it was "dumb amendment and Congress should be embarrassed we have to vote on it." That being said, the Coburn Amendment passed with the backing of 27 Democratic senators last week and passed the House with over 100 Democratic votes because if it hadn't neither would the Credit Cardholder's Bill of Rights Act.
President Obama has indicated that he wants to sign the bill by Memorial Day, and look for that to happen after today's vote. Once signed by Obama, Congressional aides tell NBC News that it would take about nine months before the new laws fully go into effect.
