Udall Introduces Bill to Stop Unfair Credit Card Interest Rate Hikes
Bill Would Move up Date for Credit Card Reforms, Protect Consumers from Last-Minute Abuses
Washington, D.C. - Today U.S. Senator Mark Udall announced that he has introduced a bill to speed up relief for consumers on the heels of news that credit card companies are driving up outrageous interest rates in order to beat consumer protection laws set to go into effect next year.
Since May, when the Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act) was signed into law, credit card companies have been taking advantage of a nine-month implementation period to jack up already high interest rates even higher. The result is unfair rates that are further burdening families that were already struggling with debt. A study by the Pew Charitable Trusts Safe Credit Cards Project that will be released soon has found that credit card interest rates rose 20 percent in the first six months of this year - despite the fact that federal interest rates actually went down.
Late Wednesday, Senator Udall introduced a bill in the U.S. Senate to move up the deadline for credit card companies to comply with the Credit CARD Act reforms and bring consumers some relief. The original bill gave companies until February 2010 because credit card companies said they needed nine months to update their computer systems. Senator Udall's Expedited CARD Reform for Consumers Act of 2009 would require companies to comply by December 1, 2009.
"Consumers who play by the rules are being victimized by credit card companies that are trying to game the system in order to get rate hikes in under the wire," Senator Udall said. "Credit cards are a valuable and important tool in our economy - but now even consumers who faithfully pay their bills on time have seen their interest rates double. I'm introducing this bill to stop exploitive practices that are bleeding consumers and hurting already struggling Colorado families."
Senator Udall was a co-sponsor of the Senate Credit CARD Act, which was signed into law on May 22, 2009. The Credit CARD Act bars the use of "universal default" clauses - provisions that allow card issuers to impose a new, higher interest rate on a credit card account based on financial activity unrelated to that account. The bill requires advance notice of interest-rate increases and requires that cardholders be able to avoid paying a higher rate by cancelling the card before that rate takes effect. If a card is canceled before a rate increase, the remaining balance will be subject to the terms and conditions - especially the lower interest rate - that applied at the time of cancellation.
As a Member of the U.S. House of Representatives, Senator Udall pioneered credit card reform as the original author of legislation in 2005. The Udall bill of 2005 was the basis for legislation (the Credit Cardholders' Bill of Rights) that passed the House earlier this year.
The Expedited CARD Reform for Consumers Act of 2009 was originally introduced in the House by Reps. Carolyn Maloney of New York, and Barney Frank of Massachusetts.