February 14,2009
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CC Problems resolved w/Sen. Dodd's Bill, Pt.2
List of outstanding fixes.Grace periods: are so short and unstable that thousands of credit card consumers are caught off-guard. Laws need to be legislated to allow more time to make credit card payments before consumers are slammed with penalties and fees. Senator Dodd's bill would prohibit late fees if the card issuer delayed crediting the payment, and would require credit card statements to be mailed 21 days before the bill is due, rather than the current 14.
‘Universal Default': This is one of Dodd's biggest peeves. It concerns the practice where a credit card holder misses a single payment on a bill (credit card or otherwise), creating a ‘delinquency'. After the creditor brands that consumer as being ‘in default', every credit card lender goes after that person and jacks the interest rate on all the credit card loans that person has.
So, if a consumer falls behind on a utility bill but is up-to-date all credit card bills, the card lenders can still raise rates on all their accounts with that person. Dodd's new bill would ban universal default, and the raising of interest rates on card holders in good standing for reasons unrelated to that account.
Change the fees and terms: Reasonable notice and cause will be required before existing consumer contracts can be altered. This is especially important where unilateral decisions are made that involve credit card consumers in good standing.
Re-pricing: Arbitrary credit card re-pricing "anytime" and for "any reason" is on the chopping block, also.
Young applicants: Marketing to youth will be regulated. New credit card accounts for minors (those under age 21) will require a parent's or guardian's signature or, at least, another individual who agrees to take responsibility for any debt. In addition, these young applicants also will have to present proof of their means to repay any extended credit or else present a financial literacy certificate.
Predatory practices: A wide-ranging study and hearing will look into the best way to curtail misleading and predatory practices that drive unsuspecting credit card consumers further into debt.