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Credit Card Holders' Bill of Rights: What it Could Mean for You

By Javier Lavagnino, Esq. on April 30, 2009 12:52 PM

Amidst rising credit card debt and increased bankruptcy filings in the United States during the recession, the AP reports that the House of Representatives appears to be getting close to passing one measured called the "Credit Card Holders' Bill of Rights". The legislation certainly sounds impressive and significant (as do most things that have "Bill of Rights" appended to them), but what would the measure actually do for us were it to come into law?

Here's a short list of what lawmakers are reportedly highlighting as the benefits passed on to card holders by the legislation:

1) The big one, the measure would impose a 45-day notice requirement for interest rate increases. Unexpected and arguably unwarranted increases in consumer interest rates have been a major gripe, and a notice requirement could make it possible to pay down or transfer a balance before an increased rate comes into play.

2) Hand-in hand, retroactive rate hikes would be banned in many circumstances. In other words, with some exceptions, you probably wouldn't have to worry about a rate increase applying to your already-existing balances.

3) The measure would gets rid of the practice of "double-cycle billing", which "eliminates the interest-free period for consumers who move from paying the full balance monthly to carrying a balance." This means that people generally won't be paying for interest on debt they've already paid off in a timely manner.

4) The measure would prohibit issuing credit cards to people under the age of 18.

Although the bill apparently has support on both sides of the aisle, opponents of the measure say the timing of the law is quite poor. They say that, considering the tough economic times facing both lenders and consumers, the legislation could arguably result in lenders tightening up their lending standards and putting credit out of reach for some consumers who may be in dire need.

However, the argument seems to go both ways, as some in favor of the bill suggest that consumers may be at their most vulnerable during this recession, and that increased protections will simply prevent consumers being abused by "questionable industry practices". We'll keep you posted on the progress of this and/or similar measures in the Senate.

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