WASHINGTON, DC – House Majority Whip James E. Clyburn released the following statement announcing that more provisions to hold credit card companies accountable and protect consumers will go into effect today as part of the Credit CARD Act – or the “Credit Cardholders’ Bill of Rights” (PL 111-24) which was signed into law on May 22, 2009.

“Credit card companies have been taking advantage of consumers for too long and need to be held accountable.  The new regulations in place today protect Americans by banning unfair rate increases, forbidding abusive fees and penalties by credit card companies, and is a part of our overall plan to rebuild our economy.”

Background on implementation of the Credit Cardholders’ Bill of Rights follows:

August 20, 2009-already took effect:

  • Provide increased written notice to consumers of any increases in the interest rate or otherwise makes a significant change to the terms of a credit card account;
  • Inform consumers of their right to cancel the card before the rate hike goes into effect;
  • Send statements to consumers 21 days before the due date of any payments.

Will Become Effective Today, February 22, 2010:

  • Prohibits arbitrary interest rate increases and universal default on existing balances;
  • Prohibits issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions, and also limits over-limit fees on electing cardholders;
  • Requires payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest;
  • Prohibits issuers from setting early morning deadlines for credit card payments;
  • Prohibits interest charges on debt paid on time (double-cycle billing ban);
  • Requires issuers extending credit to young consumers under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt; or proof that the applicant has an independent means of repaying any credit extended;
  • Protects recipients of gift cards by requiring all gift cards to have at least a five-year life span, and eliminates the practice of declining values and hidden fees for those cards not used within a reasonable period of time.

Will Become Effective August 22, 2010

  • Requires penalty fees to be reasonable and proportional to the omission or violation.
  • Requires that creditors periodically review all interest rate increases since January 2009 and reduce rates when a review indicates that a reduction is warranted.
  • Amends the Electronic Fund Transfer Act to limit dormancy, inactivity, and service fees associated with gift cards.