Credit Card Speed Up Passes House

Credit card reform legislation recently passed the U.S. House of Representatives.

The House approved a bill that will speed up the implementation of credit card reform legislation passed earlier this year. Originally the legislation – which places restrictions on some of the credit card industries most controversial practices – was planned to phase in through Summer 2010. Now there is a push for a December 2009 implementation.

With passage, the expedited legislation would stop random interest rate increases and universal default on present balances, tightened over-the-limit-fees, forced banks to use proportional interest and penalty fees, and mandated periodic reviews that can lead to rate reductions, according to one government website, along with other smaller features.  

Some card companies have used the phase-in periods to increase fees and interest rates that they slap onto customers’ bills. The practice has drawn criticism from lawmakers, who have accused them of sticking it to the consumer.

“Card companies have redoubled many of the abusive practices that brought Congress to pass my original reforms last Spring. Rather than use the time-- time they asked for-- since the bill’s signing in May to prepare for the changes, they’ve raised rates and fees with absolutely no regard for the dire position of millions of their customers,” said Rep. Carolyn Maloney, D-N.Y., who sponsored the original legislation.

A survey of 57 credit institutions by the Federal Reserve found seventy-five percent of banks did not expect to reach compliance until February 2010, raising doubts about the viability of an expedited December schedule.