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Sen. Carper Votes For Credit Card Reform Bill

Senator: Bipartisan Bill Balances Consumer Needs with Maintaining Availability of Credit

May 19 2009

WASHINGTON – Credit card reform legislation that improves consumer protections but still ensures banks can provide credit won the support of Sen. Tom Carper (D-Del.), who helped forge the bipartisan legislation, the Credit Card Accountability Responsibility and Disclosure Act of 2009 or CARD Act (H.R. 627).The bill passed today by a vote of 90-5

“My first priority for credit card reform was that it be fair to consumers. I want to make sure everyone has access to simple and reliable information about their credit cards and are not misled by unexpected changes to their interest rates, or by unfair fees,” Sen. Carper said. “While this bill isn’t perfect, I believe the final Senate compromise strikes a fair and reasonable balance that protects credit card holders from confusing credit card practices, but does so in a way that won’t severely harm consumer access to credit.”

After the bill was reported out of the Senate Banking Committee on March 31 on a partisan vote, Sen. Carper worked with Banking Chairman Christopher Dodd (D-Conn.) and Ranking Member Richard Shelby (R-Ala.) to make the bill better comply with rules issued last December by the Federal Reserve Board designed to curb credit card abuses and unfair practices. Rather than reinvent the work done by the Fed, Sen. Carper encouraged that the legislation more closely track what the Fed originally issued. He also called for the bill to speed up, where appropriate, some of the Fed rules if such changes could be implemented quickly and would bring real relief to consumers.

“The Fed did a lot of good work, and companies have already begun to implement many of the changes called for. It was important that we didn’t write legislation that would unnecessarily up-end what the Fed did or inadvertently delay some of these needed changes from taking place,” Sen. Carper. “I’m happy that, in the end, this bill pushes credit card companies to implement some of the more important changes up front, but still gives them enough time overall to comply with the mandates in the bill.”

In addition, Sen. Carper encouraged leaders to include provisions designed to better protect young people from aggressive credit card marketers. The final bill now requires that before a credit card is issued to anyone under age 21, that young person must get a parent or guardian co-signer, or prove they can repay their debt.

“I have two kids in college, and it seems like every day we receive mail encouraging them to sign up for a new credit card,” said Sen. Carper. “It’s important that we put a check on that kind of solicitation so that young people don’t incur unnecessary debt.”

Other key credit card reforms will:

 - Protect consumers with sensible rules for how and when credit card companies can raise interest rates. Card companies must give 45 days’ notice before increasing rates.

 - Ensure that companies can’t raise interest rates because of nonpayment until 60 days have passed. The legislation also gives consumers the ability to earn back that lower interest rate if they make timely payments over six months. 

 - Crack down on abusive fees. Credit card companies must mail statements at least 21 days before the bill is due so cardholders can avoid hefty late fees.

 - Enhance consumer disclosuresby requiring more understandable explanations of payoff timing, late payment deadlines and penalties, card renewal terms, and requiring credit issuers post their credit card agreements online.

 - Stop companies from imposing fees on cardholders who exceed their credit limit unless the cardholder authorizes such charges.

The Senate bill must now be reconciled with a House version before it goes to President Obama who has said he wants to sign a credit card reform bill by Memorial Day.