Northern Virginia Congressman Jim Moran (D-8th) welcomed the implementation of a new law to stop the abusive practices of credit card companies, which went into effect today. The reforms included in the Credit CARD Act, which Moran helped pass and the President signed into law last year. The legislation represents a giant step forward in the struggle to end unfair industry practices and protect consumers from retroactive rate increases, misleading late fee charges, over-limit fee traps, and other abusive tactics. Today marks the end of the multi-month grace period included in the bill to allow the industry to prepare for the sweeping changes.
“When so many American families are struggling to make ends meet, people deserve to be treated fairly by their credit card companies,” said Moran. “Finally, consumers will have a level playing field.”
The new law bans retroactive interest rate hikes on existing balances (except when payments are more than 60 days late), double-cycle billing and due-date gimmicks, and stops companies from charging over-the-limit fees unless the consumer opts-in. Consumers will save at least $10 billion a year from curbs on interest rate increases alone, according to the Pew Charitable Trust which tracks credit card issues.
The law increases notice of any rate hikes going forward on new purchases to 45 days, requires card companies to fairly credit and allocate payments and prohibits charging fees just to pay a bill by phone. It also protects young consumers by requiring that before cards can be issued to anyone under 21, a parent must co-sign or an ability to pay must be demonstrated.
“These new measures to reign in credit card companies are part of a long-term plan to rebuild the economy in a way that works for middle-class families by promoting responsibility and hard work, as opposed to risky spending and nebulous financing schemes,” said Moran. “The Credit CARD Act gives Americans the information and the rights they need to make smart, informed decisions about their financial well-being.”