Democratic representative from New York, Carolyn Maloney, has introduced new legislation that could have a major impact on the credit card industry. The new credit card bill, titled HR 5244, could bring some much sought after welcome changes, looking to provide cardholders with a greater level of protection and putting an end to the predatory lending practices many of the credit card companies have engaged in recently.
The new bill will also provide cardholders with protection when it comes to billing cycles. Some credit card companies send out bills so late that cardholders only have a couple days to get their payments in on time, posing a problem for some card holders trying to get their bill’s due date. The new legislation proposed will require credit card statements and bills to be mailed out 25 days before the due date rather than the current minimum of 14. In addition, the bill would mandate that credit card companies accept payments and deem them “on time” if they arrive by 5:00 local time on the due date.
One of my personal pet peeves is the two-cycle billing that some credit card companies, particularly Chase, like to use. With this method of billing, finance charges are essentially levied based on the average of the previous two-billing cycles. Even if you’ve paid your balance in full for the previous month, the two-cycle billing method imposes finance charges based in part on a previous outstanding balance. This method of bill penalizes card holders unfairly for carrying a balance even if it’s been paid off.
The bill also proposes a number of changes that will help prevent unfair fees. For example, the bill would give cardholders the option to have purchases denied if those charges will put them over their credit limit rather than having to pay huge over-limit fees. The bill would also prevent interest from being charged on top of late fees and would cap the number of over-limit fees allowed to three consecutive periods.
It will be interesting to see if the legislation makes it through. After all, the banking and credit card lobby, one of the most powerful political lobbies on Capitol Hill, is likely to fight this one tooth and nail.
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