According to an article in the Dallas Morning News, President Obama is planning to sign the credit card legislation that would put a Credit Cardholders’ Bill of Rights in place.
The article said:
The Credit Cardholders’ Bill of Rights Act:
• Takes effect nine months after enactment, except for notice before interest rates are increased, which goes into effect in 90 days.
• Prohibits retroactive rate increases unless the cardholder is at least 60 days behind in paying the bill. If a person does fall behind and the rate on past buys is increased, lenders must restore the lower rate after six months if the cardholder has paid monthly bills on time.
• Requires lenders to post their credit card agreements on the Internet and customers must receive 45 days notice before interest rates are increased.
• Requires anyone younger than 21to prove that they can repay the money before being given a card or have a parent or guardian promise to pay off their debt if they default.
• Prohibits over-the-limit fees unless a cardholder elects to be allowed to go over a limit.
• Requires lenders to say how much time it would take and how much money in interest would be paid if only the minimum monthly payments are made.
• Requires that gift cards remain valid for five years.
• Bans “pay-to-pay” fees, which are charged when someone pays the bill by phone or on the Internet.
This legislation is set to provide more protections to debtors with credit cards. I think it’s especially prudent to restrict the availability of credit cards to youth under 21 years old. Many youth who sign up for credit cards do not fully understand the ramifications of accruing credit card debt . As a result, thousands of recent college graduates file bankruptcy every year because they are simply overwhelmed by their credit card debt and their student loan obligations.
Past methods of increasing interest rates have created a situation where many credit card debtors are unable to dig out the debt hole. Hopefully, this legislation will give debtors more opportunity to avoid damaging interest rate hikes.