New credit card protections for Mainers

By Mike Michaud | Feb 24, 2010

Last year, Congress passed into law a bill called the "Credit Cardholders' Bill of Rights Act." It contained a number of common sense provisions like banning retroactive interest rate hikes on existing balances, double-cycle billing and due-date gimmicks. The bill also increases the advance notice of impending rate hikes, giving cardholders the information they need to make decisions about their financial well-being.

I have heard from many Mainers who have shared personal stories of how their credit card companies surprised them with increased rates and sudden agreement changes. Nationwide, more than 50,000 consumers have written the Federal Reserve Board in support of eliminating abusive credit card practices.

Some of the protections contained in the Credit Cardholders' Bill of Rights had already taken effect prior to this week. Credit card companies were forced to provide increased written notice to consumers of any increases in interest rates or significant changes to the terms of a credit card account. Companies were also required to inform consumers of their right to cancel the card before the rate hike goes into effect, and they must send statements to consumers 21 days before the due date of any payments.

But after Feb. 22, Mainers and consumers across the country can now enjoy new protections. Here is a breakdown of key provisions in the bill that is now the law of the land:

• Prohibits arbitrary interest-rate increases and universal default on existing balances;

• Requires payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest;

• Prohibits issuers from setting early morning deadlines for credit card payments;

• Prohibits interest charges on debt paid on time (double-cycle billing ban);

• Protects recipients of gift cards by requiring all gift cards to have at least a five-year life span, and eliminates the practice of declining values and hidden fees for those cards not used within a reasonable period of time.

While these are common sense reforms that should have been made years ago, passing the Credit Cardholders' Bill of Rights Act is the least Congress can do for consumers, especially those who play by the rules and are struggling to make ends meet.

Mainers deserve to be free of credit card gimmicks and unfair policies. These new protections are a huge step toward making that goal a reality.

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