We at the Slips have been remarkably silent about the proposed Credit Cardholders’ Bill of Rights, easily the most major proposed credit card legislation in a long time, perhaps since the Truth-in-Lending Act of 1968. I think we’ve all been expecting each other to take the lead in piping in. It’s high time we started a discussion on this legislation, so here goes (warning, this is a long post, but this is a hugely important issue).
The Cardholders’ Bill of Rights takes aim at some of the most troubling and odious practices of the card industry. The proposed legislation has lots of features (summarized here), but the most important is that it would prohibit or limit a number of card issuer billing practices that are substantively unfair or that consumers rarely know about even if disclosed: (1) universal cross-default clauses; (2) any-time, any-reason rate changes; (3) retroactive application of interest rates without a opportunity to cancel the account first; (4) two-cycle billing; (5) unlimited applications of overlimit fees in a single billing cycle; (6) give consumers the ability to opt-out of overlimit transactions; and (7) require pro rata application of payments to balances accruing at different interest rates.
These terms and practices may not be familiar to all readers of the Slips, so let me briefly explain each in turn, because chances are some apply to at least one of your credit cards.