House Passes Davis/Carney Amendment to Protect Credit Cardholders

By THE OFFICE OF CONGRESSMAN CHRIS CARNEY (D-10)

WASHINGTON – Today, Rep. Carney voted to bring common sense reform and consumer protections to our financial system. The Credit Cardholders’ Bill of Rights ends the unfair practices of the credit card industry and protects consumers from the abusive tactics that continue to drive so many Americans deeper and deeper into debt. The bill levels the playing field between card issuers and cardholders by applying common sense regulations that ban most retroactive interest rate hikes on existing balances (except when payments are more than 30 days late), double-cycle billing and due-date gimmicks.

The amendment offered by U.S. Reps. Susan Davis (D-CA) and Christopher P. Carney (D-PA) requires credit card companies to notify consumers 30 days before closing a person’s credit card account and provide information about keeping the account open.

Millions of Americans have their credit card accounts closed every year. Credit card companies can close credit accounts without prior notice. Because of the way credit scores are calculated, account closures can lower a consumer’s credit score.

“In these tough economic times it is critically important that we do everything we can to protect responsible credit card users,” said Congressman Carney. “The people who work hard and play by the rules deserve fair treatment from their credit card companies. The Davis/Carney amendment gives Americans the information and rights they need to make decisions about their financial lives,” continued Carney. “Under current law, people who are disciplined with their credit cards and may only use them in case of an emergency can have their card canceled without notice. That cancellation negatively affects their credit score and that is unfair. My amendment is a common sense solution that protects the consumer from this unfair practice.”

“Often, consumers do not know that their accounts are being closed until after the fact,” said Davis. “By then, it’s too late to protect their credit score. A good credit score can mean a mortgage for someone’s first home, a school loan, the capital to start a small business, or the ability to buy a car. Responsible consumers deserve to have advance warning that their credit cards will be closed and their credit scores will be lowered.”

The Credit Cardholders’ Bill of Rights is part of a long-term plan to rebuild our economy in a way that is consistent with our values of responsibility and hard work, not high-flying finance schemes. Specifically, the bill protects cardholders against arbitrary interest rate increases, empowers them to set limits on their credit and requires card companies to fairly credit and allocate payments. It also prohibits charging fees just to pay a bill by phone, charging over-the-limit fees unless a consumer opts-in in advance, or issuing credits cards to minors.

The Davis-Carney Amendment also requires credit card companies to provide consumers with options to keep the account open, programs available to repay the balance, and the impact on the holder’s credit score as a result of the closure.

The Davis-Carney Amendment was included in The Credit Cardholders’ Bill of Rights Act (H.R. 627), which would limit the ability of credit card companies to increase interest rates, require 45 day notice of a pending interest rate increase, and require more disclosure of rates, fees and penalties to consumers. H.R. 627 passed the House on a vote of 357-70 and the amendment was passed without objection.

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