Rep. John J. LaFalce, D-N.Y., on Wednesday introduced legislation that would bar credit card issuers from penalizing customers who pay their bills in full each month.

The Credit Card On-Time Payment Protection Act would make it a Truth-in- Lending Act violation for issuers to cancel accounts or impose fees on cardholders who do not incur finance charges.

The bill also would prohibit issuers from shortening the repayment period as a way to earn extra float on customer payments.

"At a time of escalating consumer debt, paying off a monthly credit card bill should be encouraged," the ranking Democrat on the House Banking Committee said in an official statement.

"The banking industry should not engage in actions that discourage responsible use of credit and reduction in credit card debt."

The legislation is not expected to be enacted this year because Congress has only five working weeks remaining.

No companion legislation has been introduced in the Senate this session.

Visa officials had not seen the legislation, but are likely to oppose it, spokesman Michael J. McGarry said.

"Our view has always been that the bank credit card industry is very competitive with over 6,000 issuers, and it is always best to let the market work on its own," he said.

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