Menendez Reminds Consumers Of New Credit Card Protections Taking Effect Tomorrow

Menendez Reminds Consumers Of New Credit Card Protections Taking Effect Tomorrow

Member of Banking Committee also sends letter to Fed urging effective adoption of his "ability to pay" provision

Menendez was leading proponent of credit card reform legislation, which passed earlier this year
Washington - U.S. Senator Robert Menendez (D-NJ), author of the Credit Card Reform Act and a lead co-sponsor of landmark credit card legislation that passed into law this year, issued a reminder to consumers today of the new protections that will take effect tomorrow as a result of the new law. He also sent a letter to Federal Reserve Chairman Ben Bernanke urging that the Federal Reserve effectively issue regulations in accordance with a Menendez provision requiring credit card companies to consider a consumer's ability to pay when opening or increasing a line of credit. The protections that will go into effect tomorrow are the first of the various new regulations to be implemented. They include:
· Allowing credit card holders to cancel their accounts rather than accept interest rate or fee hikes
· Requiring credit card companies to notify cardholders at least 45 days in advance of changes in interest rates or fee or finance charge increases
· Ensuring cardholders are not trapped into late fees by prohibiting companies from treating a payment as late if the credit card statement was sent less than 21 days prior to the payment due date (the current rule is 14 days).
"This is the beginning of the end for the credit card tricks and traps that have squeezed far too many families for far too long," said Menendez. "We fought for and passed these reforms to help make things even between consumers and credit card companies, and these new rules are going to help accomplish that. I look forward to the implementation of the entire bill over the next few months so that families will no longer have to worry if a trap door will open beneath them every time they swipe a card."
The entirety of the credit card bill will be implemented by February, and the summary is available here: http://banking.senate.gov/public/_files/051909_CreditCardSummaryFinalPassage.pdf

PDF of Menendez letter to Bernanke: http://menendez.senate.gov/pdf/08182009LetterBernanke.pdf

Text of letter:

August 18, 2009
The Honorable Ben S. Bernanke
Chairman
The Federal Reserve Board
20th Street and Constitution Avenue, NW
Washington, DC 20551
Dear Chairman Bernanke:
I write to urge the Federal Reserve Board to issue effective regulations under the Credit Card Accountability Responsibility and Disclosure Act of 2009, signed into law on May 22, 2009.
As you may know, the credit card bill included an amendment that I introduced (which became Sec. 150 of the bill) regarding a consumer's ability to pay credit card debt. This provision requires credit card companies to consider a consumer's ability to pay when opening a line of credit or increasing a line of credit. If properly written, such a regulation would help avoid further bailouts by alleviating the systemic risk that results from the provision of credit to people who have no ability to pay, which could result in defaults on a large scale. I urge the Federal Reserve to write ability to pay regulations that require credit card companies to take into account, at a minimum, a consumer's income and other liabilities before issuing credit.
I should also note that I have received reports of credit card companies using this interim period as an excuse to raise their customers' interest rates in a shameful effort to "beat the deadline" and circumvent the spirit of the legislation.
I look forward to your response on the status of these credit card regulations and the ability to pay regulation in particular.
Sincerely,

ROBERT MENENDEZ
United States Senator
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