Cleaver’s Credit Cardholders' Bill of Rights passes House

Thursday, the Credit Cardholder’s Bill of Rights Act of 2009 (H.R. 627) which Congressman Emanuel Cleaver, II, Chairman Barney Frank (D-NY), Subcommittee Chairwoman Carolyn B. Maloney (D-NY) and Sens. Charles Schumer (D-NY) and Mark Udall (D-CO) are cosponsoring, passed the House of representatives by a vote of 357-70.

This comprehensive credit card reform legislation is aimed at leveling the playing field between credit card companies and consumers and abolishes industry abuses that are unfair, deceptive and anti-competitive.

“I was sorry to see this important legislation die in the Senate last year and proud that it is one of the first pieces of legislation introduced in this new Congress. In this economy, when far too many are relying on their credit cards for survival, we cannot tolerate abusive and unfair practices that exploit these difficult times,” said Congressman Cleaver.

“First came the housing crisis, then the crisis in the financial institutions. The next shoe to drop is the credit card crisis. As more people are out of work, and hard times are reaching deep into their pockets, the default rates for credit cards continue to rise. In response to falling payment rates, the credit card companies are raising interest rates and increasing their minimum payments. These unfair practices, over which you have no control, only force more people to miss their payments, causing default rates to climb higher,” said Cleaver.

“Credit card companies continue to take bailout money from the government, and yet seem unable to admit their role in the failure of our economy. They have raised rates, fees, and forced hard-working people to choose between making their minimum payments and putting food on the table, and the consequences have hit our neighborhoods hard. Their policies handed credit to anyone with a pulse and now these companies complain that people with no business having a credit card are behind on their payments. It rings very hollow to me.”

“We continue to act in good faith with the nation’s banks, only to have that faith returned with insults. The old phrase ‘biting the hand that feeds you’ comes to mind as stories of exporting jobs and lavish bonuses for failed executives come out daily. I just do not know how many times the American people will tolerate this type of action by the same CEOs they bailed out for bad decisions. Perhaps we should not be surprised,” said the Congressman.

“Today’s action helps gives teeth to the meeting the President held last week with the major Credit Card companies at the White House,” said Cleaver. Specifically, the bill protects cardholders against arbitrary interest rate increases, empowers them to set limits on their credit and requires card companies to fairly credit and allocate payments. It also prohibits charging fees just to pay a bill by phone, charging over-the-limit fees unless a consumer opts-in in advance or issuing credits cards to minors.

“It is issuing credit cards to minors I have been particularly concerned about. Twenty-five years ago, credit card companies spent $100 million marketing to kids. This year alone they plan on spending nearly $17 billion to market to minors. If that is not disturbing enough, the average college student has more than $3,000 in credit card debt on four or more credit cards. It is a horrible way to begin adult life in and has contributed to the average age of bankruptcy continuing to get younger. I am pleased this bill tries to safeguard our young people,” said Cleaver.

The Credit Cardholders' Bill of Rights:

• Protects cardholders against arbitrary interest rate increases
• Prevents cardholders who pay on time from being unfairly penalized
• Protects cardholders from due date gimmicks
• Shields cardholders from misleading terms
• Empowers cardholders to set limits on their credit
• Requires card companies to fairly credit and allocate payments
• Prohibits card companies from imposing excessive fees on cardholders
• Prevents card companies from giving subprime credit cards to people who can't afford them
• Requires Congress to provide better oversight of the credit card industry
• Contains NO rate caps, fee setting, or price controls

The bill now goes to the Senate for consideration.

Emanuel Cleaver, II is the U.S. Representative for Missouri’s Fifth Congressional District, which includes Kansas City, Independence, Lee's Summit, Raytown, Grandview, Sugar Creek, Belton, Raymore and Peculiar, Missouri. He is a member of the exclusive House Financial Services Committee, House Homeland Security Committee and the Speaker’s Select Committee on Energy Independence and Global Warming. Congressman Cleaver also serves as a Regional Whip of the Democratic Caucus and First Vice-Chair-elect of the Congressional Black Caucus.