With the $700 Billion financial bailout plan in the works this week, lawmakers in the U.S. House of Representatives are also trying to pass legislation that would restrict credit card issuers from imposing suprise interest rate increases. The Credit Cardholders' Bill of Rights Act would require financial companies to give consumers 45 day notice on changes to their interest rate, as well as extend the billing statement date from a minimum of 14 days to 25 days.
On Tuesday, the legislation passed in the House, but still needs to go through the Senate. It could also get vetoed by the President; however this may be difficult given that consumer protection agencies support the Bill and consumers are looking to save where possible.
As you can imagine, credit card issuers are against the legislation because they argue that it will lead to higher interest rates for new accounts and limit the amount of credit available. The Fed estimates that U.S. consumers currently carry $900 Billion in credit card debt.
I agree that consumers should be given fair warning of changes in their credit card terms and conditions, but consumers also need to actively monitor their accounts. Most credit card companies will forgive fees for cardholders who miss a payment a time or two. While credit card fees and interest rates can become excessive if an account is not managed on a frequent basis, in large part it comes down to better personal financial managment. Consumers need to charge only what they can afford and make sure they review each and every credit card bill that they receive, regardless if it comes 14 days before the due date or 25 days.
Maybe its come to the point where credit card terms and conditions need to be spelled out like the nutritional facts on the back of a can of soup. Seriously.