Senate Considers Dodd's Bill to Crack Down on Abusive Credit Card Practices
Legislation Establishes Strong New Protections for ConsumersWASHINGTON, D.C. — The Senate will today begin consideration of Senator Chris Dodd's (D-CT) comprehensive legislation that will protect consumers from the abusive, confusing, and deceptive practices employed by credit card companies. Dodd, the Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, and Banking Committee Ranking Member Senator Richard Shelby (R-AL) reached an agreement on the legislation over the weekend.
"Today, we have the opportunity to stand up for the American people and put an end to the unfair fees, unjustified interest rate hikes, and other abusive practices that credit card companies use to gouge consumers," said Dodd. "While I expect some battles in the coming days from credit card companies and their allies in an effort to diminish these strict new rules, I stand ready to fight against any attempt to weaken the strong consumer protections in this bill."
Among other provisions, the Credit Card Accountability, Responsibility, and Disclosure Act would:
- Protect consumers from arbitrary interest rate, fee and finance charge increases and prohibit universal default on existing balances
- Prohibit interest charges on paid-off balances from previous billing cycle (also known as a double-cycle billing ban)
- Require payments to be applied first to the credit card balance with the highest interest rate
- Protect students and other young consumers from aggressive credit card solicitations
- Ensure that payments are fairly allocated to the account with the highest interest rate first
- Require greater disclosure of rates, terms and billing details by credit card companies
- Establish tougher penalties for companies that violate the law