Lawmakers: New Credit Card Rules Protect Consumers

Congresswoman Nita Lowey (NY-18) and Congressman John Hall (NY-19) today announced two new critical consumer protections that went into effect Sunday, August 22, as a result of the

Two members of Congress who represent Rockland County are applauding new federal rules that took effect Sunday to protect consumers from rising credit card fees and interest rates.

The rules under the Credit Cardholders' Bill of Rights were passed by Congress and signed into law in May 2009.

"Protecting consumers from deceptive practices and providing New Yorkers with financial security is necessary for our economic recovery," said U.S. Rep. John Hall, whose district includes much of North Rockland.  "This legislation will prevent credit card companies from charging excessive penalty fees and enable consumers to obtain adjustments to unfair interest rates.  The changes going into effect now put the control back where it belongs--in the hands of consumers."

U.S. Rep. Nita Lower, whose district includes New City and Congers, said that for too long, credit card companies have preyed on consumers through deceptive practices and unfair rates and fees.

"The Credit Cardholders' Bill of Rights will protect consumers who are one day late or one dollar short from being penalized excessively," Lowey said. "I am pleased these two critical protections will stop excessive penalty fees and give cardholders an opportunity to lower high interest rates."

The new rules requires that penalty fees for late or returned payments or declined account access to be reasonable and proportional. Also, if credit card companies raise rates for a customers, the rules require the companies to re-evaluate that rate increase every six months and reduce that rate within 45 days after completing the evaluation if the factors leading to the rate increase are no longer present.

The lawmakers said that under previous rules, a consumer who was even an hour late with a credit card payment could be charged a late fee many times larger than the size of the bill itself.  They said that the new rules also ensure individuals who have paid down a large balance or who have begun successfully paying their credit card bill on time will see their interest rate cut.

Provisions from the Credit Cardholders' Bill of Rights that have already gone into effect also:

• Prohibit retroactive interest rate hikes on existing balances.
• Ban double-cycle billing (charging interest twice on balances paid on time).
• Ensure fairness of due dates, including requiring statements be mailed 21 days in advance of the payment date and requiring the payment date to remain the same each month.
• Require 45-days' advance notice of interest rate, fee and finance charge hikes.
• Strengthen credit card protections for young people.
• Require that billing statements from credit card companies be clear, be in plain English, and show how long a balance will take to be fully paid off if only the minimum payment is made.

Lowey said she has also introduced legislation that would extend to small businesses the same consumer protections guaranteed in the Credit Cardholders' Bill of Rights.

"With unemployment on the rise locally and job creation a top priority throughout the country, we must protect small business owners from abusive practices that threaten their businesses' financial security and ability to hire new workers and expand," said Lowey.