Commentary: Credit card reform is overdue

This editorial appeared in The Miami Herald.

Consumers may have reason to feel overlooked as the government rushes to bail out banks, carmakers and insurance companies "too big to fail," but there is one bright spot in legislation moving forward on Capitol Hill. The Credit Cardholders' Bill of Rights won approval from the House in a solid bipartisan vote, 357-70, last week and has the support of the administration as it moves to the Senate for a showdown vote.

The bill is a long overdue response to the abuses of predatory credit-card issuers who have used every trick in the book to extract money from cardholders. That includes shortening the payment period, using misleading terms to confuse cardholders and even penalizing consumers who pay on time. The lopsided vote reflects the public's anger over having to bail out banks with taxpayer money and then having to pay unfair and exorbitant charges to the same institutions when their credit-card statements arrives.

Among other provisions, the bill protects cardholders from arbitrary interest-rate increases; prevents the use of "due-date" gimmicks; prohibits card companies from imposing excessive fees and prevents them from issuing subprime cards to people who can't afford them. The Federal Reserve adopted a somewhat similar package of rules last year, but that doesn't take effect until July 2010. Why wait?

Moreover, the House bill goes beyond the Fed's regulations in several ways. For instance, it would require card companies to send out bills at least 21 days before the due date, and to give cardholders at least 45 days' notice before increasing interest rates. The legislation bars adding fees for paying by phone and bans issuance of cards to most minors under 18.

To read the complete editorial, visit The Miami Herald.