Credit Cardholders' Bill of Rights

From Senator Carl Levin (MI):

Earlier this week, Congress passed landmark legislation that substantially reforms the way credit card companies do business with their customers. I had the pleasure of attending the culmination of our work earlier today as President Obama signed the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act) into law (P.L. 111-24). This law is the result of a comprehensive effort by many in Congress to protect consumers from some of the most egregious and unfair credit card practices common in the industry today.

I have been concerned about abusive credit card practices for years. In 2005, in response to numerous complaints from credit card holders about unfair practices involving interest rates, fees, and disclosure practices, I asked the Government Accountability Office (GAO) to investigate the matter and to issue a report with their findings. In 2006, the GAO issued that report, which detailed the fees, interest rates, and practices associated with 28 popular credit cards and the profits they were producing for six large credit card issuers.Those findings prompted me to initiate an investigation into the practices of the credit card industry through the Permanent Subcommittee on Investigations (PSI), of which I am the Chairman. In May 2007, in response to the abuses brought to light through PSI’s extensive work, I introduced the Stop Unfair Practices in Credit Cards Act (S.1395). This bill sought to ban some of the most abusive credit card practices that unfairly deepen or prolong credit card debt held by consumers. Although this bill was not enacted, we did not give up.

This Congress, I teamed up with Senator Chris Dodd (D-CT), Chairman of the Senate Banking, Housing, and Urban Affairs Committee, to introduce the Dodd-Levin CARD Act of 2009 (S.414). Our legislation provided the foundation for the compromise bill that was signed into law today. Although not as strong as the original Dodd-Levin bill, the compromise still puts an end to a host of unfair credit card practices that mire millions of families in debt. Under this law, for example, credit card companies are prohibited from hiking interest rates retroactively on existing credit card debt for cardholders who play by the rules and from imposing interest charges on debt that was repaid on time. Cardholders who paid late and had their interest rates hiked could be able to restore their prior rates if they pay the minimum amount on time for six months. The bill also requires credit card companies to send out bills 21 days before the bill is due and to apply cardholder payments first to the debt with the highest interest rate.

As many in Michigan continue to struggle through the worst economic conditions they have faced in their lifetimes, this law will put an end to a host of deceptive and unjust credit card practices that compound the financial hardship of consumers who are doing their best to stay afloat. This is a good day for consumer rights and protections, and I am pleased our perseverance has paid off.