WASHINGTON — Rep. Carolyn Maloney and Sen. Charles Schumer announced plans Thursday to introduce sweeping credit card reform.
The New York Democrats' legislation is expected to be unveiled in coming days, but dozens of cosponsors have already lined up to sign on, including House Financial Services Chairman Barney Frank.
The bill is similar to a bill championed by Rep. Maloney last year and would give the force of law to much of what the Federal Reserve Board and other agencies have outlined in regulation, while going even further in some areas.
The legislation would require the Fed credit card rules to go into effect 90 days after the president signs the bill into law. Currently, the rules do not go into effect until mid-2010.
The bill emulates much of what the regulations cover. It would require card companies to give 45-days notice before any interest rate change and prevent card companies from increasing interest rates on existing card balances except in special circumstances.
It also would ban double cycle billing, require payments to be allocated proportionally to balances that have different rates, and lengthens the duration between when bills are mailed and payments are due.
Besides speeding up the timetable, the legislation goes beyond the regulations by requiring card companies to let consumers set their own credit limits, prevent companies from charging "over-the-limit" fees when a cardholder has set a limit, and places other limitations on fees.
It would also prohibit card companies from knowingly issuing cards to individuals under 18 who are not emancipated minors.
"A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees," said Rep. Maloney in a press release. "This bill would give cardholders the information and rights they deserve to make decisions about their own credit."