Credit Card Legislation Passed by Congress
It may be too late for many Indiana consumers, but it's still noteworthy. Congress just passed legislation that will shortly be signed by the President that cracks down on some of the abusive practices long used by the credit card industry. Although the law won't go into effect for nine months, the bill will generally bar interest rate increases on existing balances unless a cardholder has failed to make even a minimum payment for 60 days, require 45 days' notice before any interest rate increase, and prohibit increases any time in the first year after an account is activated. The legislation would also require card companies to apply a consumer's monthly payment to the debt with the highest interest rate, or to all debts equally.
It doesn't go far enough, but it's a good first start. And, perhaps more important than the details of the law, is the fact that the tide has turned and the credit card companies know it. Will it result in a restriction of credit? Sure. But I don't think that's a bad thing. I think it is a very good thing.
Credit must be given where credit is due (pun intended). This legislation clearly was spearheaded and made possible by President Obama. "I've been in Washington 20 years," said Ed Mierzwinski, the consumer program director with the U.S. Public Interest Research Group. "For the first 19, we couldn't even get a committee vote on credit card reform despite these practices." I am excited and optimistic about the benefits I hope consumers will reap under the Obama administration.
Unfortunately, as I noted above, it's already too late for many Indiana consumers who have suffered under the credit card industry's abusive practices. There have been a couple recent Indiana Court of Appeals decisions that have made it even worse for Indiana consumers who have been sued over credit card debt. I will discuss those decisions in a future blog post.