ARLINGTON, Va.-In response to H.R. 5244, the Credit Cardholders' Bill of Rights of 2008, NAFCU sent a letter to Reps. Nancy Pelosi and John Boehner as well as Barney Frank, Spencer Bachus, Carolyn Maloney and the entire House.
Noting that "NAFCU recognizes that predatory and egregious credit card practices exist in the marketplace and need to be prevented," the trade group said it nonetheless has "concerns" over the "well-intentioned" legislation.
Specifically, NAFCU said it believes provisions limiting retroactive rate increases could lead to "safety and soundness issues" for credit unions due to the "negative impact on credit unions' ability to manage risk and the adverse ramifications for responsible risk-based lending this section would have in its current form."
"Most credit unions will not unilaterally raise interest rates on outstanding balances. However, in some cases rate adjustments may be necessary to protect the credit card portfolio due to rising interest rates, particularly in this challenging economic environment," NAFCU said.
It also raised objections to:
* The definition of a "due date" in card payments, currently proposed as "5 p.m. local time," saying some small credit unions offer only limited hours.
* To proposals for pro rata payment allocations, saying it would "like institutions to have the option of applying any payment beyond the minimum payment to the oldest existing debt.
* To proposals related to opt-out of credit authorization of over-the-limit transactions if fees are imposed, saying it could require that each creditor establish and maintain a notification system, including a toll-free telephone number and an Internet address permitting any consumer to notify the creditor of its decision to opt-out of credit authorization for over-the-limit transactions.
