Friday, February 26, 2010

New Rules for Credit Card Companies Take Effect

Every Maine family with a credit card will be protected by new rules that went into effect Feb. 22, according to Congresswoman Chellie Pingree. The rules are designed to stop the worst practices of the big banks and credit companies and give consumers more control over their finances.
“These big credit card companies have been running roughshod over consumers for too long,” Pingree said. “These new rules are going to give card holders the protections they deserve.”
The rules will ban rate increases on existing balances in most cases, require 45 day advance notice of future rate increases, make it more difficult for credit card companies to charge “over the limit” fees and prohibit credit card companies from charging card holders when they pay online or over the phone.
Pingree was the first to speak on the Credit Card Holders Bill of Rights on the floor of Congress last year, saying that credit cards have become a necessity for most Americans, and at the same time the playing field has been tipped in favor of the credit card companies.
“Everywhere you turn, it seems the credit card companies have dreamed up a new fee or another clever scheme to raise your interest rate,” Pingree said. “Basic fairness has been replaced by deception and greed.”
“These days, using a credit card is like going to a Las Vegas casino—no matter how clever or responsible you are, 9 times out of 10 you’re going to lose and the company is going to win,” Pingree said. “Managing your finances shouldn’t be a gamble. The deck shouldn’t be stacked against you.”
During her speech, Pingree said the tough economy has forced more people to turn to credit cards to pay for basic necessities. “Last weekend in Maine I was talking with one of my constituents who told me a credit card is the only way she can pay her medical bills,” she said. “And last winter, with skyrocketing heating oil prices, a credit card was the only way many people in my state were able to stay warm.”
Some provisions of the bill: (more details available at
Bars rate increases on existing balances unless the cardholder is at least 60 days behind in paying the bill. If a person does fall behind and the rate on past buys is increased, lenders must restore the lower rate after six months if the cardholder has paid monthly bills on time. Requires that customers receive 45 days notice before rates are increased. Prohibits over-the-limit fees unless a cardholder signs up for them in advance. Requires lenders to apply payments to highest interest-rate balances first. Requires lenders to say how much time it would take and how much money in interest would be paid if only the minimum monthly payments are made. Bans “pay-to-pay” fees, which are charged when someone pays the bill by phone or on the Internet. Requires lenders to post their credit card agreements on the Internet. Require banks to give customers a reasonable time, such as 21 days, to pay the bill before it is considered late.