New credit card protections go into effect this week

Democrats are dedicated to protecting hard working Americans from the unfair practices of big banks and credit card companies. That’s why we passed the Credit Cardholder’s Bill of Rights – to put an end to the excessive credit card fees and crack down on deceptive and unfair gift card practices. 

These changes have already had a major impact for the public. According a recent report from the non-partisan Pew Charitable Trust, “before passage of the Credit CARD Act, Pew’s research showed that 100% of cards from the largest banks included practices that the Federal Reserve called unfair or deceptive. Those practices have largely gone away, and that’s good news for consumers.”

Starting this week, the final provisions of the Credit Cardholder’s Bill of Rights will go into effect.  We took bold action to protect American consumers, including:

• We Ended Excessive Late Fees: We now require that penalty charges be reasonable and proportional, and we forbid excessive fees - such as multiple penalties for a single violation or inactivity fees.  Late fees can no longer be larger than the minimum payment, and banks will need to justify late fees that are higher than $25. 

• We Prohibited Excessive Rate Hikes: Since last year, card issuers have been required to give you 45 days notice before raising your interest rate.  Starting this month, the companies must notify you of the reason they are imposing the increase, and must periodically reevaluate the rate change to consider a reduction.

• We Put an End to Gift Card Fees: We removed the deceptive “fine print” on the gift cards you buy.  Starting immediately, all new gift cards must last a minimum of five years, and no monthly fee can be charged if the gift card was used in the last 12 months.

Other major provisions of the Credit Cardholder’s Bill of Rights that have already gone into effect include:

• Prohibiting retroactive interest rate hikes on existing balances.
• Banning double-cycle billing (charging interest twice for balances paid on time).
• Ensuring fairness of due dates, including requiring statements be mailed 21 days in  advance of the payment date and requiring the payment date to remain the same each month.
• Requiring 45-days advance notice of interest rate, fee and finance charge hikes.
• Strengthening credit card protections for young people.
• Requiring that billing statements from credit card companies be clear, in plain English, and show how long a balance will take to be fully paid off if only the minimum payment is made.