I’m pretty sure the recession is happening this year, but the Congress has seen fit to vote through a reform of credit card lending rules that doesn’t go into effect for a year after it’s enacted. Figure that one out.
I’m No Journalist, But. . .
Shouldn’t the Democrat and Chronicle at least mention the fact that Eric Massa has introduced credit card reform legislation when discussing credit card reform legislation in a news article? Gosh, maybe they didn’t know. They should really read more blogs over there. . .
Massa Introduces Credit Reform Bill
I suspect this is one piece of legislation which will die a swift and horrible death in the House of Representatives, but who knows? The mood of the country is on the right side of the credit reform issue right now – and we’re all looking for a way to penalize banks anyway – so maybe this thing has a shot if it gets done quickly. I wonder, though, if it might not have been wiser to have introduced as an amendment to another bill than as it’s own thing. The question is: who besides Massa is willing to publicly endorse this same bill?
WASHINGTON, D.C. – This morning Rep. Eric Massa (NY-29) introduced his first piece of legislation in Congress. The American Credit Card Reform Act has five key objectives designed to prevent predatory lending practices by the credit card industry:
- Cap maximum credit card interest rates at 14%
- Prohibit transfer fees
- Prohibit predatory advertising on college campuses
- Prohibit the changing of credit card terms if the consumer is in full compliance with the terms
- Require due dates to be set at a minimum of 30 days from the date bills are sent
What’s in Your Wallet, Bub?
In These Times has a great report about the predatory lending schemes currently employed by the credit industry, often on people who thought they’d been responsible, careful debtors. Changes are happening in the wake of the current recession crisis that many people aren’t figuring out they’ve been gamed until they check their credit card bills, only to find whopping interest rate hikes and penalties for things they didn’t even know they’d done wrong. But worst of all is the “Universal default” clause written into many a credit contract:
Killer Credit — In These Times
Universal default is another vicious innovation. If applied, one lender can raise the terms of a loan to the default rate (27 percent, on average) when a customer fails to pay another lender, even if the customer’s record is perfect with the original bank. In theory, a technical error or fraud could trigger rate hikes on every card someone owns, a scary thought considering the average American has seven credit cards in his or her wallet. Roughly half of the banks that issue credit cards have universal default language in their contracts.