Late this afternoon the House overwhelmingly approved a bill that restricts so called unfair credit card practices. A similar bill passed overhwelmingly in the Senate yesterday.
It's called the Credit Card Accountablity, Responsibility and Disclosure Act and here's what it means for you. The bill would ban practices like charging consumers to pay-by-phone and ban sudden hikes in interest rates.
If you pay more than the minimun it would be applied to balances with the highest interest rates. Details in the fine print must be made clearer.
The legislation also bans interest rate hikes on exisiting balances unless payments are 60 days overdue. After a rate increase, if you pay on time for 6 months you get your previous interest rate reinstated.
The legislation bans double-billing. That's when a late paying consumer is hit with interest on a prior month's balance that has been paid in full in addition to the late balance.
Other provisions say, your bill must be sent 21 days before the due date. You'll have atleast 45 days notice before any significant change of terms. Teaser or promotional rates must be offered for atleast six months. Payments received by 5pm on the due date are to be considered on time. Payments with due dates that fall on holidays or weekends must be accepted by the next business day.
The new rules will do little to stop banks from cutting credit lines for consumers it deems risky. Congress has just sent the legislation to Presidnet Obama who plans to sign in on it on Friday. The new rules are scheduled to take effect in February.