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Action on the Credit Card Bill of Rights
A subcommittee of the House Financial Services Committee voted last week to approve a bill called ?The Credit Cardholders? Bill of Rights?.
If the bill succeeds in the rest of the House and the Senate, good news could be in store for borrowers.
Unfair and Deceptive Practices
Since the current recession was so heavily fueled by subprime lending and similar questionable practices, lawmakers? attention has been drawn to the rules governing lending in the U.S. Of chief concern to many consumer rights activists:
Universal Default: If you default ? that is, fail to make timely payments ? on one account, other creditors can penalize you with higher interest rates or monthly payments.
Introductory & ?Teaser? Rates: Often, credit card issuers advertise low initial interest rates boldly, and only mention in small type that these rates are only valid for a limited time.
Fees for Phone & Online Payment: Some cards charge service fees to consumers who choose to pay their bills by phone or on the Internet, a practice that has been cited as problematic by members of the Financial Services Committee.
If the Credit Cardholders? Bill of Rights becomes law, some of these issues may be addressed, which is good news for consumers. Banks and other card issuers, on the other hand, are reportedly less than thrilled with the idea of new restrictions on their lending.
At a time when banks are struggling to build capital and pull themselves out from the weight of bad investment decisions, revenue from credit card fees and high interest rates could provide a substantial source of income ? as it does now.
Just the Beginning?
Some analysts suggest that credit card legislation could be the beginning of new regulations for the banking and lending industry.
While legislative restrictions to market and lending action may be unwelcome by some players, many democrats see the lack of regulation as a key factor that contributed to the nation?s current financial stress.
If successful, the bill will likely offer card issuers around one year to adopt new policies.
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