First Consumer Credit Card Protections In Maloney-Abercrombie Reform Bill Take Effect Thursday

Press Release

The first in a sweeping series of protections for consumers from abusive practices by credit card companies take effect tomorrow, Thursday, August 20th. The protections are part of the Credit Cardholder Bill of Rights, co-sponsored by Hawaii Representative Neil Abercrombie. The legislation was approved by Congress in May and signed into law by President Obama. As of tomorrow, credit card issuers must give consumers 45 days advance notice of all interest rate and fee hikes, and statements will have to be mailed 21 days in advance of payment due dates.

The balance of the reforms, which take effect in February, will:

* Prevent card companies from unfairly increasing interest rates on existing card balances;
* Require companies to allow consumers set their own fixed credit limit;
* Prevent companies from charging "over-the-limit" fees when a cardholder has set a limit, or when a preauthorized credit "hold" pushes a consumer over their limit;
* Limit (to 3) the number of over-the-limit fees companies can charge for the same transaction;
* End unfair "double cycle" billing, when card companies charge interest on debt consumers have already paid on time;
* Prevent card companies from piling additional fees on balances consisting solely of left-over interest;
* Prohibit card companies from charging fees for payments received over the phone or the Internet;
* Establish standard definitions of terms like "fixed rate" and "prime rate" so companies can't mislead or deceive consumers in marketing and advertising;
* Give consumers who are pre-approved for a card the right to reject that card prior to activation without negatively affecting their credit scores.

"These reforms, combined with remaining provisions set to take effect in February, will protect Hawaii households from excessive fees, unfair interest rate hikes, and arbitrary agreements that credit card companies can revise at will," said Abercrombie. "Credit card companies will be held accountable, and Americans who pay their bills and play by the rules will be able to build up their credit history, make educated decisions about their financial future and have a fair shot at financial security."

Abercrombie has also introduced the Small Business Credit Card Act, which extends the same protections in the Credit Cardholder Bill of Rights to small businesses with 50 or fewer employees. He is working closely with Republicans and Democrats in both the House and Senate on the legislation.

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