Credit card holders could get relief this year

In December, I wrote about the new credit card rules adopted by the Federal Reserve to stop excessive fees and unexpected interest rate hikes. The big disappointment with these new rues was that they didn't take affect until 2010. Congress isn't happy with that delay and bills are now under consideration to speed up the process of implementing these new credit card rules.

The Credit Cardholder's Bill of Rights was passed in 2008 in the House of Representatives, but was stalled by Republicans in the Senate. It's now been reintroduced in the new Congress by bill author Rep. Carolyn Maloney (D-NY) in the House of Representatives and by Senators Charles Schumer (D-NY) and Mark Udall (D-CO) in the Senate. With a greater percentage of the Senate being Democratic, the bill has a much better chance of passage. If the bill passes, credit card companies would have only 90 days to comply.

"Eliminating some of the unfair practices and rate increases of credit cards would be a nice bailout for taxpayers, and could be better than a stimulus check for some families," says Bill Hardekopf, CEO of He expects President Obama to sign the bill because he recommended many of these same changes during his presidential campaign.Here's a summary of the key provisions of the Credit Cardholder's Bill of Rights:

* Prevents arbitrary interest rate increases. Issuers would have to give cardholders 45 days notice of any rate increase. Currently, the issuer can change the terms of your card with a short 15-day notice.

* Prevents issuers from retroactively increasing the interest rates on the existing balances of a cardholder unless the cardholder is more than 30 days late.

* Prohibits double-cycle billing and limits issuers from assessing fees on the remaining interest-only balance of a cardholder who has paid his bill on time.

* Provides more time to make your payment. Gives cardholders time to pay their bills by mailing statements 25 calendar days before the due date. It will also prohibit issuers from charging a late fee if cardholder can present proof of mailing payment within seven days of due date.

* Prevents credit scores from dropping because of pre-approved credit cards. Cardholders who are pre-approved for a card have the right to reject it up until the moment they activate it without having their credit adversely

* Prevents issuers from using the monthly payment to pay off the lowest interest rate first. Issuers should fairly credit and allocate payments at different rates.

* Prevents issuers from imposing excessive fees on cardholders. The proposed reforms would cap the number of "over-the-limit" fees card companies are allowed to charge to three. Some issuers currently charge an unlimited
number of fees when consumers exceed their credit limit.

These changes are needed now and the sooner the bill is passed the better it will be for the consumer. The Federal Reserve caved in to the interests of the credit card companies. Congress needs to respond by protecting consumers from excessive fees and interest rate charges faster, especially is this time of credit crisis. Banks have gotten their bailout. it's time for the consumers to get their fair share.

Lita Epstein is the author of more than 25 books including the "Complete Idiot's Guide to Improving Your Credit Score."
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