Fighting back against abusive credit card practices

New consumer protections for credit card owners are now the law.  They were included in the Credit Card Accountability Responsibility & Disclosure Act of 2009.

I was the only member of Utah’s delegation in the House to support this important bill.  I did so because consumers deserve fair and transparent treatment from the card companies.

Banks now have to follow new rules designed to protect consumers from unwittingly going deeper into debt. Here are some of the key changes:

• The interest rate cannot be increased in the first year after an account is opened unless an introductory rate has come to an end.  After that, cardholders must be notified 45 days in advance of any rate change.
• For existing balances, rates can’t increase unless the account is at least 60 days past due.  If payments are made on time for 6 consecutive months, the original rate must be restored.
• Service fees, such as activation and annual fees will be capped at 25 percent of the credit limit during the first year of use.  After that, there is no cap.
• The due date for your payment must remain consistent.  Statements must be sent out 21 days before the payment due date and finance charges and fees cannot be applied before that period ends.
• Cardholders will now see how many months it will take to pay off a balance if only minimum payments are made.
• Credit cards can no longer be issued to anyone under 21, unless the applicant has a co-signer or can show independent means to repay the debt.

I also supported the legislation that moved up the date when these changes took effect.

Consumers still need to use credit responsibly and only take on as much debt as they can repay.  But from now on, many of the practices that led to customers being crushed by credit card debt they had no hope of repaying are now prohibited. It’s an important win for Utah consumers.