CONGRESSMAN COHEN HAILS PASSAGE OF CREDIT CARD HOLDERS BILL OF RIGHTS

“Families in our communities are drowning under increasing credit card debt. Many of them are doing the best they can to get out from under it – and they need some relief,” Congressman Cohen said. “Credit card companies had their chance to show they cared more about people than profit. They failed and now Congress has acted to bring help to hard-working families in perpetual debt. I was proud to support his bill and urge the President to sign it into law soon.”

“I’m particularly pleased that college students will finally be protected from the deceptive practices of the credit card industry. Credit card companies shouldn’t be tempting them with t-shirts and iPods and promises of easy credit. This bill brings an end to these practices and sends a clear message to the industry that the status quo is no longer acceptable,” Congressman Cohen said.

Congressman Cohen has long championed prohibiting solicitations of credit card applications to college students on campuses with gifts and incentives. A study with the U.S. PIRG suggests that credit card companies and their subcontractors are taking advantage of students’ cash shortages to attract them to tables with offers of free things ranging from t-shirts to iPods. Seventy-six percent of college students reported stopping at tables to consider offers or apply for credit cards because of the free gifts offered by the companies.

Key highlights of the bill that benefit families and small businesses in the 9th District include:

• Barring interest rate increases on existing balances unless a card-holder has failed to make even a minimum payment for 60 days, and outlaws double-cycle billing,
• Ending the so-called “Universal Default Rate” in which card issuers raise a cardholder's interest rate because of behavior related to other creditors — even if the cardholder is in good standing with the card in question.
• Requiring companies to give consumers 45 days’ notice before any interest rate increase,
• Prohibiting interest rate increases anytime in the first year that an account is activated,
• Requiring card companies to apply a consumer’s monthly payment to the debt with the highest interest rate, or to all debts equally,
• Requiring all gift cards to have at least a five-year life span, and eliminating the practice of declining values and hidden fees for those cards not used within a reasonable period of time,
• Establishing a Small Business Information Security Task Force to address the information technology security needs of small businesses and help prevent the loss of credit card data.

Generally, the credit card provisions take effect in nine months; some provisions, such as the 45-day notification for interest rate increases and 21- day mail requirement, take effect in 90 days.