Credit Cardholders Bill of Rights Act

Statement

Credit Cardholders Bill of Rights Act

Posted by: Sen. Richard Burr

Today, the Senate voted on the Credit Cardholders Bill of Rights Act. I share the frustration many consumers feel, which is why I voted in favor of this bill. I've heard from a number of North Carolina consumers about unfair and confusing credit card practices. Many of these North Carolinians are struggling with abrupt changes in their credit cards related to fees, interest rates, and credit limits.

Included in this bill are rules that will require credit card companies to give consumers a reasonable period of time to make their payments before charging a late fee, as well as prohibit unfair interest rate increases on outstanding credit card balances. The bill bans "double-cycle billing," in which consumers are sometimes charged interest on debt they have already paid. It also requires companies to first apply payments to balances with the highest interest rate instead of applying payments in a way that only benefits the lender. Additionally, the new rules will require credit card companies to provide better information to cardholders about the duration of penalty rates and the financial consequences of making only the minimum required payment. The new rules will also improve consumer notification regarding any changes to their interest rates and other account terms.

Finally, the bill builds in protections to prevent young consumers from getting into credit card debt they can't repay and don't fully understand. Right now, credit cards are appealing to young adults because of the promise of financial independence. However, many times these young men and women get in over their heads and end up not being able to pay off their bills. The bill works to prevent these types of situations by requiring consumers under the age of 21 to have a cosigner or demonstrate an ability to repay.

I offered an amendment to this bill that would have allowed parents or a legal guardian access to their child's credit report in order to prevent identity theft and fraud. I look forward to continuing to work to see that common-sense reforms like this are enacted to protect American consumers.

Source