Rep. Carolyn Maloney, D-N.Y., chairwoman of a House Financial Servicessubcommittee, said, "These are solid, common-sense principles that will helpguide the shape and scope of our credit card reform legislation and self-regulation."
Maloney cited four broad principles for credit card legislation she intends todraft over Congress' summer recess. She is seeking public comment on the creditcard principles, which are posted on her Web site.
"These principles recognize that the modern risk-based pricing credit cardsystem requires shared responsibility between credit card issuers and theircustomers," she said.
The proposal focuses on strong underwriting standards to ensure consumers canrepay the debt. Her proposal would "eliminate any-time any-reason repricing" and"eliminate universal default." It also calls on card issuers to offer "theoption of a card with a fixed rate for a fixed period of time."
It would provide "cardholders notice of all rate increases, including defaultand non-default-based increases, and the right to cancel the card and pay offthe balance at the original rate," the proposal said.
A second principle would urge banks and card issuers to clearly explain cardaccount features, terms and pricing. This would include providing cardholderswith "clear notice in advance of what behavior on their part may cause aninterest-rate increase and how to return to a lower interest rate," it said.
A third principle would encourage card issuers to provide customers notice andchoice with changes in terms. "Issuers should be required to provide cardholdersnotice and the opportunity to opt out when rates increase for any reason," theproposal said. One idea would be to offer customers "personalized 'accountalerts' to remind them when payment due dates are approaching or when they arenearing their credit limit."
A fourth principle calls on card issuers to encourage responsible and "successful credit use, especially among new credit entrants and customers withspecial needs."
The proposal said: "Credit card issuers should proactively contact customerswho may need special support and provide workout assistance." It should increasecredit lines "only with good credit behavior and proven ability to repay."
-By Rob Wells, Dow Jones Newswires; 202-862-9272;
(END) Dow Jones Newswires
