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Credit card practices bill approved by Senate
WASHINGTON (5/20/09)—The Senate on Tuesday voted 90-5 to approve H.R. 627, the Credit Cardholders' Bill of Rights, which would prohibit lenders from making arbitrary changes to the interest rates and terms associated with a card that holds an existing balance. Under the provisions of the bill, lenders must maintain low introductory rates for six months and may not increase the annual percentage rate (APR) on a credit card for the first year that the credit account is open. If a lender chooses to raise a cardholder’s interest rate, the lender must inform the cardholder 45 days before that rate is raised. Card issuers would also be prevented from changing the payment conditions of any credit card. However, lenders would be allowed to increase interest rates once an account has been delinquent for 60 days. In a May 19 statement, Senator and bill co-sponsor Christopher Dodd (D-Conn.) said the bill “will insist on consumer protections that are strong and reliable, rules that are transparent and fair, and statements that are clear and informative.” While the bill as passed by the Senate would “help rein in” many abusive credit card practices, CUNA President/CEO Dan Mica said Tuesday he was concerned that some portions of the bill could “have the unintended consequence of raising compliance costs and making credit more expensive and less available to consumers.” Legislation mirroring the existing regulation that has been adopted by federal bank and credit union regulatory agencies would have been more palatable for credit unions, the CUNA statement said. The bill, as currently amended, does not address interchange fees, but will commission a study of interchange fees by the Government Accountability Office. CUNA has consistently opposed any changes to the current interchange fee regulations, and said Tuesday that “efforts to affect interchange and other elements of the payment processing system would have detrimental effects on the credit unions who issue debit cards and credit cards for their members.” CUNA said the decision to begin a GAO study of interchange rates was “a more prudent approach” than hastily moving legislation. The House version of the bill passed 357-70 in late April. It is believed that portions of the bill were crafted to ensure quick passage, and Congress will now try and reconcile any differences between the two bills. President Barack Obama has asked Congress to deliver the final legislation to his desk by Memorial Day.
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