Sen. Chris Dodd is looking to push through a credit card reform act that would benefit consumers, and the chances of the bill’s passage have been greatly increased by a compromise with fellow Banking Committee member Sen. Richard Shelby (R-AL) announced yesterday.
Dodd had sought to ban all interest rate increases on existing balances. Under the compromise bill, card issuers would be allowed to retroactively bump up rates for any borrower whose payments are 60 days past due. However, if the borrower pays on time for six months, the card issuer would have to restore the original rate. The bill also prohibits card issuers from increasing rates during the first year a credit card account is opened and requires them to get customers’ permission to set up accounts so that transactions over the limit can be processed. Another provision would require card issuers to post credit card agreements online. (Trejos)
A vote on the bill could come as early as this week. Other provisions in the reform bill would put restrictions on marketing cards to people under 21, and require a 45-day notice of any rate changes.
Besides helping consumers, a bill like this will also help Chris Dodd politically. Dodd has been portrayed as someone who is in the pocket of the big banks–well, the banks do not like this bill, and they’ve made their objections clear. This bill helps Dodd shore up support on the left, as well as reach out to consumers who have suffered rate increases without warning, or who simply find their credit card companies irritating. It’s yet another step in Dodd’s road to recovery.
Trejos, Nancy. “Senators Cut Deal On Credit Card Bill.” Washington Post 12 May, 2009.