Financial Services Committee Approves Maloney-Frank bill to Speed Up Credit Card Reforms

The Financial Services Committee unanimously passed H.R. 3639, the Expedited CARD Reform for Consumers Act of 2009, which would move up the effective date for credit card reforms from February 22 to December 1. The bill, sponsored by Rep. Carolyn Maloney (D-NY) and Financial Services Committee Chairman Barney Frank (D-MA), changes the date by which banks and credit card issuers would have to comply with the remaining provisions of the Credit CARD Act, new consumer-friendly legislation signed by President Obama earlier this year. The bill now moves to the House floor for consideration.

Rep. Carol Maloney

Rep. Carolyn Maloney (D-NY) said: “This marks a step forward in bringing consumers badly-needed relief,” Maloney said. “Just in time for the holidays, Congress can lock in a ban on interest rate hikes on existing balances and the tricks that have kept far too many consumers trapped in a never-ending cycle of debt: tricks like double-cycle billing, due-date gamesmanship, and applying payments to lowest rates first.”

“The card companies brought this on themselves, by using the time between when the bill was signed by President Obama and when it goes into effect to ‘get in under the wire’ with a last gasp of unfair practices,” Maloney said. “Today’s action shows Congress can act with speed when necessary to provide consumers the protection they need.”

In reporting the bill out, the committee voted to keep the original effective date of February 22, 2010 for prepaid gift cards (which are now all printed and on the way to retailers for the holiday season), and for small credit card issuers with under 2 million cardholder accounts. The six largest card issuers control over 80% of the credit card market.

U.S. Senator Concerned About Predatory Credit Card Practices Against Small Businesses

From the press office of the U.S. Senate Committee on Small Business and Entrepreneurship

United States Senator Mary Landrieu, D-La., Chair of the Senate Committee on Small Business and Entrepreneurship, commented on the passage of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 by the House of Representatives.

Senator Mary Landrieu

Sen. Landrieu said:

“The Credit CARD Act provides significant protections for consumers who could otherwise fall victim to abusive and deceptive practices by credit card companies. Specifically, the legislation requires credit card companies to provide adequate notice of significant changes to a credit card agreement, including an interest rate increase. It also places limits on credit card solicitation to individuals under the age of 21, prohibits issuers from raising rates during the first year after opening an account and requires that promotional rates last at least six months.

“Unfortunately however, the Credit CARD Act does not apply protections to small business owners who have fallen victim to predatory credit card practices. I am disappointed that the Senate did not accept my bipartisan amendment cosponsored by Senator Snowe that would have applied the bill’s protections to small businesses with 50 or fewer employees. While 59 percent of small businesses recently reported that they use credit cards to finance their businesses, 63 percent report that their interest rates have increased in the last year and 41 percent reported cuts to their credit limits. I will continue to work with my colleagues on the Small Business & Entrepreneurship Committee to pass legislation that will protect America’s Main Street businesses from usurious credit card practices.”