Confronting Poverty Through Curbing Abusive Lending: President Obama to Sign New Credit Card Regulations Tomorrow
Yesterday, the House passed the bipartisan Credit Card Accountability Responsibility and Disclosure (Credit CARD) Act of 2009 (HR627) by a vote of 279-147. The Senate passed equivalent legislation on Tuesday by a vote of 90-5. President Obama is expected to sign the bill into law tomorrow, enacting a large-scale reform of the credit card industry that would crack down on interest rates and fees.
A good summary of the bill can be found at the Center for Responsible Lending's Action Page, which identifies the key reforms as:
- Elimination of unjustified interest rate hikes and unfair "any-time/any-reason" contract clauses.
- Requiring honest, fair penalty rates.
- Limiting excessive and growing penalty fees.
- Prohibiting late fees for on time payments.
- Giving cardholders greater choice.
- Eliminating abusive and hidden finance charges.
- Limiting aggressive marketing, and irresponsible lending, to consumers under age 21 without the ability to repay debt.
Addressing abusive lending practices is a critical part of confronting poverty. Excessive fees, skyrocketing interest rates, and other practices often force middle-income families into bankruptcy and exacerbate the financial situation of lower-income families. In fact, the average amount of household debt of credit cardholders who have a balance is estimated to exceed $17,000.
While many families rely on credit cards to pay for basic living expenses or unexpected emergencies, they often ensnared in difficult-to-pay-back, and hard-to-decipher interest rates that end up making the situation worse. For more information on these issues, check out these reports from the Center for Responsible Lending.
This bill, which would go into effect in nine months, would address many of these abusive practices, taking an important step towards helping families achieve financial security.
If you have any questions, or would like additional information please contact Melissa Boteach at firstname.lastname@example.org.