WASHINGTON – The Senate passed a credit card reform bill yesterday aimed at reigning in abusive credit card practices, but an unrelated amendment on guns jeopardizes the measure as it goes back to the House for a vote, expected today.
The amendment would authorize people to carry concealed weapons when they visit national parks. Such unrelated amendments are allowed to be added under the Senate’s rules.
The bill, which began as a threat to credit unions, was eventually watered down enough that the credit union lobby lifted its opposition.
It would bar credit card issuers from retroactively raising rates until a cardholder is at least 60 days delinquent; ban double-cycle billing and universal default; and prohibit solicitation of cards to minors. It would also require lenders to apply payments to balances with the highest interest rates first.
On cards with more than one interest rate, issuers would have to apply payments to those with the highest rate, making it easier for cardholders to pay off their cards.
Issuers cannot charge fees for exceeding credit limits unless the cardholder agrees in advance to pay the fee in exchange for being allowed to exceed the limit.
Card issuers must send their bills at least 21 days before payments are due.
On gift cards, no fees may be charged for lack of activity, unless more than a year has passed, and cards must have at least a five-year life.
The provisions are very similar to those passed by the Federal Reserve Board as amendments to its Regulation Z last December. The major difference is the Fed’s rules do no go into effect until June 30, 2010, while these changes would go into effect nine months after the bill is signed by the President, which could be as early as today. That means the changes would go into effect next February.
The credit unions originally opposed the amendments, but they realized that few credit unions engage in these practices.
