Credit Card Legislation

06:01:48 AM Monday, August 04, 2008

Credit Card Deals - House Committee Voted in Favor of Credit Legislation

The House Financial Services Committee supported the Credit Card Bill of Rights, introduced and sponsored by Carolyn Maloney. The panel voted 39 in favor and 27 against the legislation that would ban or restrict predatory credit card practices such as interest rate hikes and exorbitant penalty charges.

The subprime mortgage crisis can be a good lesson to learn from, the US economy is still weak after the housing bubble crash. And consumer advocates believe that abusive credit practices will continue without credit card legislation. Learn more about credit legislation hearings.

The number of those customers who have become victims of unfair credit practices is ever-increasing. The thing is, it's getting more and more difficult to handle credit cards, especially now that the US economy is weak.

Some obscure credit terms have become notorious, for instance universal default. And it's worth mentioning that most lenders disavowed this practice, while many issuers still use the practice of increasing interest rates on strength of credit activity of their customers on other credit products. The most irritating thing about unfair interest rate hikes is that a higher interest rate is applied to the existing balance and it may result in heavy finance charges.

The House panel did amend the legislation dealing with egregious credit practices. While consumer folks are in favor of this proposal, banking organizations share the opinion that such restrictions could have the opposite effect upon cardholders and small business owners. Meantime, the panel voted in favor of the credit card legislation and new credit rules. Let's take a closer look at this proposal!

First and foremost, this proposal requires lenders to stop charging interest rates on the balances that have already been paid off. This practice is known as a double-cycle billing. When using this method of calculating the finance charge, creditors uses the average daily balance not only for the current billing cycle but also for the previous one.

In addition to that, customers should be given at least 7 days to make their payment before the due date. It means that under this legislation, credit companies must mail credit bills 25 days before the due date. Now, credit card rules require only 14 days, and judging by the complaints, it's definitely not enough to make the payment on time.

The proposal also requires distributing credit payments equally among all card balances regardless of their interest rates. This way, if you carry a card that charges different rates on purchases and balance transfers, the odds are your payments will apply to smaller-rate balances first. Needless to say, how this can influence your credit matters.

The results of the voting show that Congress is bent on taking actions against abusive credit practices some companies use in order to boost their profits. Meantime, the bill's sponsor Carolyn Maloney called this vote the historic victory for American consumers.

I have paid my credit cards on time and at times I have paid them off , Yet when I pay them off I still get a last bill . One thing I don't understand why, if I pay before the due date sometimes 15 days before.

Let us start with most people are honest and have integrity. You treat them fairly and they will treat you fairly. It is human nature. Credit is a business deal and interest rates is cost of doing business and most understand and accept this. The skew in today's banking is driven by greed. The savings rate is 1% and credit card rate is double digits? Take the overdraft for example. As long as overdraft was about 5 to 6% I used it and let the bank money. When it went to 18%+charge for each transaction, I quit using the privilege. I also started using cash for all transactions rather than credit cards. As long as the rate was 1 or2% over prime I used that card and ignored the double digit rates. The loser is the bank. Any amount smaller than a few thousands was b'tn friends and banks lost. This method will basically kill the banks in this country since we thrive on the credit card system. Until the credit scoring system is corrected to ensure early paymenrts, additionaol payments and prior history, it is wworthless and we should abolish it or ignore it and put more faith on people. The way we are approaching fixing the credit card system is all wrong. Abolish the credit scoring and eliminate rates higher than a few points over prime rates and eliminate penalties. banking is a two way street. Customers need banking and banks need customers. If all customers start saving and quit using credit, business suffers and economical growth suffers. People use credit when income dries up and priority shouldm shift to keeping the roof over the head and look for jobs. With the now topsy turvy system the consumer out of fear ignores Mortgage payments and pays the usurious credit card -- only until he/she can not afford to. This created the mortgage crisis apart from other imbeciles who loaned the money based on short term income. I can go on about how fix the system. This my two cents for the day.