For Immediate Release: November 4, 2009

House Votes to Pass Credit Card Bill That Protects Consumers, Includes Sutton Amendment to Protect Consumers’ Credit Reports

Washington, DC - Today, the House passed H.R. 3639, the Expedited CARD Reform for Consumers Act. The bill, co-sponsored by Rep. Betty Sutton (D-OH), passed by a margin of 331-92.  This legislation will move up the effective date for all credit card reforms to Dec. 1.  It will protect consumers from last-minute, deceptive practices by credit card issuers.  The legislation includes an amendment by Rep. Sutton that will allow consumers who are notified of a new fee on their credit card to cancel it without being penalized on their credit score or report.

"As credit card companies continue to search for new ways to squeeze money out of consumers, they are continually finding new fees to impose. They are charging new annual fees, inactivity fees and even fees for paying down your balance every month.  So the choice is, pay the fee or close your account.  The problem is that if you close your account, it can hurt your credit score and credit scores play a large role in our society.  They are used by mortgage lenders, employers, landlords, and insurance providers and have a large impact on people's lives. This amendment is about leveling the playing field.  It protects consumers' credit scores by allowing them to cancel their card or shop around for another one when new fees are imposed, without penalizing them for doing so," Rep. Sutton said.

Under this legislation, changes that will take effect on Dec. 1 will:
* Prohibit arbitrary interest rate increases and universal default on existing balances;
* Prohibit issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions, and also limits over-limit fees on electing cardholders;
* Require payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest;
* Prohibit issuers from setting early morning deadlines for credit card payments;
* Prohibit interest charges on debt paid on time (double-cycle billing ban);
* Require issuers extending credit to young consumers under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt; or proof that the applicant has an independent means of repaying any credit extended;
* Require penalty fees to be reasonable and proportional to the omission or violation;
* Requires that creditors periodically review all interest rate increases since January 2009 and reduce rates when a review indicates that a reduction is warranted.

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Contact: Maureen Shanahan at 202-225-3401 or maureen.shanahan@mail.house.gov