S. 414 would amend the Consumer Credit Protection Act, to ban abusive credit practices, enhance consumer disclosures, protect underage consumers.
Detailed Summary
Credit Card Accountability Responsibility and Disclosure Act of 2009 or the Credit CARD Act of 2009 - (Sec. 3) States that this Act shall become effective nine months after its date of enactment.
<b>Title I: Consumer Protection</b> - Amends the Truth in Lending Act to require advance notice of any increase in the annual percentage rate of interest (APR) pertaining to a credit card account under an open end consumer credit plan.
Requires such advance notice to include a statement of the obligor's right to cancel the account before the effective date of the increase.
(Sec. 102) Imposes a freeze on interest rate terms and fees on canceled cards.
(Sec. 103) Sets limits on fees and interest charges, including a prohibition against penalties for on-time payments.
Authorizes a consumer to elect by timely notice to prohibit a creditor from completing any over-the-limit credit card transaction that will result in a fee, or constitute a default, under an open end consumer credit plan agreement which allows the creditor to impose an over-the-limit fee for any extension of credit beyond the amount of credit authorized.
Allows an over-the-limit fee only when an extension of credit obtained by the obligor causes the account credit limit to be exceeded. Prohibits such a fee when the credit limit is exceeded only because of a fee or interest charge.
Allows imposition of an over-the-limit fee only once during a billing cycle. Prohibits its imposition in a subsequent billing cycle with respect to such excess credit, unless the obligor has obtained an additional extension of credit in excess of the credit limit during that subsequent cycle.
Prohibits a separate fee to allow the obligor to repay an extension of credit or finance charge, whether such repayment is made by mail, electronic transfer, telephone authorization, or other means.
Requires fees for cardholder agreement violations and currency exchanges to be reasonable.
(Sec. 104) Prohibits a creditor from furnishing information to a consumer reporting agency concerning a newly opened credit card account until the credit card has been used or activated by the consumer. (Thus grants the consumer a right to reject a credit card before notice of the new account is given to a consumer reporting agency.)
(Sec. 105) Sets forth requirements for the terms of any credit card account, particularly fixed rate and prime rate, under any open end consumer credit plan.
(Sec. 106) Revises requirements for prompt and fair crediting of card payments.
(Sec. 107) Increases from 14 to 21 days the length of the billing period for imposition of the finance charge in credit statements.
(Sec. 108) Prohibits universal default except in certain circumstances.
Prohibits unilateral changes to cardholder agreements until after the date on which the credit card will expire if not renewed.
(Sec. 109) Increases the civil penalty against any creditor who fails to comply with specified requirements in the case of an individual action relating to an open end credit plan that is not secured by real property or a dwelling.
Specifies such penalty as twice the amount of any finance charge in connection with a transaction, with a minimum of $500 and a maximum of $5,000, or an appropriate higher amount in the case of an established pattern or practice of such failures.
(Sec. 110) Requires specified federal regulatory agencies to evaluate the policies and procedures used by credit card issuers for compliance with this Act.
Specifies additional transaction or event information to be included in APR information the Board of Governors of the Federal Reserve System (Federal Reserve Board) must collect, publish, and disseminate to the public.
<b>Title II: Enhanced Consumer Disclosures - </b>(Sec. 201) - Revises payoff and repayment timing disclosure requirements, as well as those for civil liability determinations for creditor compliance violations.
Requires the creditor to provide a toll-free telephone number at which the consumer may receive information about accessing credit counseling and debt management services from agencies certified by the Secretary of the Treasury (Secretary) as meeting the criteria under this Act.
Instructs the Secretary, through the Office of Financial Education (OFE), to issue guidelines for the establishment and maintenance of such a toll-free telephone number.
(Sec. 202) Revises requirements relating to late payment deadlines and penalties.
Requires a periodic statement of account to disclose: (1) the date by which a payment must be postmarked, if paid by mail, in order to avoid the imposition of a late payment fee; and (2) any possible resulting increase in interest rates for late payments.
(Sec. 203) Repeals the special rule for disclosure of APR and annual fee before a credit card account renewal.
<b>Title III: Protection of Young Consumers - </b>(Sec. 301) Prohibits issuance of a credit card on behalf of a consumer under age 21, unless the consumer has submitted a written application meeting specified requirements.
Directs the Secretary, acting through the OFE, to make and publish a list of all courses and programs that have been certified for financial literacy or financial education purposes appropriate for young consumers.
(Sec. 302) Prohibits issuance to students of certain affinity cards, pursuant to any agreement between the creditor and an institution of higher education, unless certain requirements have been met.
(Sec. 303) Amends the Fair Credit Reporting Act to allow consumers between ages 18 and 21 to elect to be included in any list provided by a consumer reporting agency in connection with a credit or insurance transaction that is not initiated by the consumer.
(Sec. 304) Amends the Truth in Lending Act to require approval by such individual to increase credit lines for credit card accounts for which a parent, legal guardian, spouse, or any other individual is jointly liable until the consumer attains the age of 21.
<b>Title IV: Federal Agency Coordination </b>- (Sec. 401) Amends the Federal Trade Commission Act to require all federal banking agencies and the Federal Trade Commission (FTC) to coordinate rulemaking and regulations.
Requires the Comptroller General to a report to Congress on the status of regulations of the federal banking agencies and the National Credit Union Administration (NCUA) regarding unfair and deceptive acts or practices by depository institutions and federal credit unions.
<b>Title V: Gift Cards - </b> (Sec. 502) Declares that, with respect to a gift certificate, store gift card, or general-use prepaid card, it is unlawful, except in specified circumstances, to: (1) impose a dormancy fee, inactivity fee, or a service fee; or (2) sell or issue such a certificate or card subject to an expiration date. Prescribes disclosure requirements for such cards.
(Sec. 504) Empowers the FTC to enforce these prohibitions.
<b>Title VI: Miscellaneous Provisions </b>- (Sec. 601) Directs the Comptroller General to study and report to certain congressional committees on the extent to which interchange fees must be disclosed to consumers and merchants and how such fees are overseen by the federal banking agencies.
(Sec. 602) Directs the Comptroller General to establish the Credit Card Safety Rating System Commission to: (1) to determine if a rating system to allow cardholders to quickly assess the level of safety of credit card agreements would be beneficial to consumers; and (2) assess the impact on credit card transparency and consumer safety of various rating system policy options.
Authorizes appropriations.
(Sec. 603) Amends the the Federal Deposit Insurance Act (FDIA) and the Federal Credit Union Act (FCUA) to increase the borrowing authority: (1) of the Federal Deposit Insurance Corporation (FDIC) from $30 billion to $100 billion; and (2) of the NCUA from $100 million to $6 billion.
Authorizes temporary further increases for the FDIC of up to $500 billion, and for the NCUA of up to $18 billion, through calendar 2010 if the FDIC Board of Directors or the NCUA Board, as the case may be, together with the Federal Reserve Board and the Secretary, determine that additional increases are necessary.
Amends the FCUA to direct the NCUA Board to establish a National Credit Union Share Insurance Fund Restoration Plan whenever the Board determines that the equity ratio of the National Credit Union Share Insurance Fund will fall below a specified minimum amount.
Status of the Legislation
Latest Major Action: 5/4/2009: By Senator Dodd from Committee on Banking, Housing, and Urban Affairs filed written report. Report No. 111-16.
Points in Favor
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Points Against
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Visitor Comments
Mother Jones
April 1, 2009, 1:16pm (report abuse)Why would anyone be against this bill unless they are in cahoots with the credit card companies?
truth
(logged in user) April 25, 2009, 4:18pm (report abuse)I read parts of this and seems great. The creditors can no longer sell your account to one another and up our interest. Out friging standing. They have to be very clear with everything they do including letting us know how long it will take to pay off the card. But this is a large bill and I may have missed or not understood what happens when an account is closed. What I'd like is the account to freeze when closed and be more like a loan. So if an account is closed we'd get a set amount to repay. Otherwise the interest will keep an account outstanding and never allow us to repay or pay it off. I hope this is in there or put in there. I'd also like a part that says I can beat my creditor with a stick for all the crap they gave me, just a suggestion.
Jake Y.
May 5, 2009, 3:53am (report abuse)Impulse buyers are well served with learning restraint. Spend only on your immediate needs, not wants, and do something that will contribute to your future. Personal loans can help with temporary expenses when you're trying to repair your credit. If you're trying to repair your credit, not getting into the habit of taking on any more debt is good, as an effort to repair your credit involves getting your debts paid off.
Jessica
May 5, 2009, 2:27pm (report abuse)I can appreciate wanting to decrease fees and make more consumer friendly decisions; however At times the senators do not read or do their homework before signing a bill, but just sign it anyway due so it will help them get re-elected. This bill will cost us 1.4 billion dollars, and the prepaid card amendment will hurt us by effectively making prepaid cards go away. Language added to S. 414 threatens network branded prepaid cards. These cards, which carry the network brands, are some of the fastest growing segments of the prepaid category. S. 414 restricts organizations involved in delivering network branded prepaid cards from charging fees and lengthens expiration dates in a manner that is virtually impossible to implement and would trigger great expense to merchants. The bill also restricts fees by requiring that all fees be charged “upfront,” the Schumer amendment will either increase the cost or would make the cards so costly that the market for them would no longer exist.
truth
(logged in user) May 12, 2009, 2:04pm (report abuse)As I said , I didn't read or understand the entire bill. I am saying something needs to be done. These companies are no more then scam artist backed by law. Solely haveing a law say you can, doesn't make it right. Loan sharking was outlawed only to have these people take it's place. The things they do just aren't right, and the lengths they go aren't justified. Here's a personal example. I've been paying above the minimum, on a maxed card with a $3500 limit on it. The bill comes in for $50 and I pay $100. Let's skip ahead 7 years and It's gotten $8400 towards it, but the bill still says $1900 outstanding. So I've more than doubled what I've used and they still want more, and I rounded what I payed. I usually pay more. Now that I refuse to pay anymore they can make me look like a dead beat for doubling their investment. Oh and this isn't the company I signed up with either. These guys aquired my account from a differant company and jacked up my interest.
Hubie
May 20, 2009, 4:59pm (report abuse)Clearly, I can see how this will benefit many Americans. And frankly, even though I'm not a big credit card user, I will probably benefit to some extent as well. However, what I don't like is the continued meddling of government into private business. Do they really think there will be no reaction by card companies to this act? Chances seem pretty good that rates will rise and it will be more difficult to get credit. Card companies have been changing card rates due to the rise of defaults on current cards. That money has to be made up somewhere. I'll be very interested to see what happens from here. Bottom-line, Obama needs to get out of being the CEO of every company across the country.
Consequences
May 22, 2009, 4:59pm (report abuse)In response to Truth -- You stated you have a maxed card at $3500.00 the minimum payment being $50 and you pay $100? That's not going to make a dent! You need to start sending hundreds of dollars more each month or you will never pay it off. Doubling the minimum payment won't even cover the interest! Of which you interest is likely been raised due to a missed payment, etc. You need to pay as much as you can afford each month. If you cannot afford to pay off your debt quickly, then you should not have charged more then you can afford.
Consequences II
May 22, 2009, 5:03pm (report abuse)What this bill will do to the Credit companies is force them to stop issuing credit to people with bad credit! The Credit companies were just as bad as the Mortgage companies in giving out credit to high risk individuals because they can make money on the high interest or sell the debt to another company. Now that their penalties, fees, and high interest rates will be restricted by the government they have to return to the old ways of lending. i.e. only lend to low risk consumers with excellent credit ratings.
Elgog Partynipple
May 23, 2009, 1:39pm (report abuse)Consequenses II, I find it interesting that you say "People with bad credit". I don't know if you realzie this, but your credit rating is based mostly on input from the credit industry and they are gaming the system. When they reduce your credit limit, as they ahve for almost everyone, then your % credit used goes up and your score goes down. Sounds suspicously like a conspiricy doesn't it? You are not in control of your credit score, the credit industry is. And they can make it what ever they want and charge you accordingly. That's just not fair.
BHL073
May 24, 2009, 9:39am (report abuse)10 years ago I got rid of all my "Bank" CC and replaced them with 1 Credit Union CC. I have not experenced any of the problems I've heard about Bank CC cards.
BHL073
May 24, 2009, 9:41am (report abuse)To an extent I agree with Truth. This bill is not perfect. However, it does appear to put more control in the hands of the user. It's up to them to manage their money.