Saturday, May 9, 2009

Credit Cardholder's Bill of Rights

I just read H.R. 627, the Credit Cardholders' Bill of Rights Act. It just passed the House of Representatives, and is on its way to the U.S. Senate for consideration.

It's a good bill, actually. I was wary when I first heard that Congress and the president wanted more regulation for the credit card industry. I'm not a complete anarchist, but I do believe in minimal government interference, especially in the free market system. Let the buyer beware, and all that. Still, the bill isn't that bad. You can read the full text of it here (just be careful of the Washingtonese *winks, grins*).

I did have a couple of concerns, and I've already written to my Senators about it; hopefully in time to catch them before they vote on it. I'd encourage anyone else to do the same.

Dear Senator,

I just finished reading the text of H.R. 627. I approached it with some skepticism, as per the reasons I stated in an earlier email. It took a moment, I admit, to become accustomed to the language of the bill, but once I had, I felt that this was largely a good bill.

I am concerned, however, by a few elements of the proposed Sec. 127B. Specifically, as outlined in section 2, subsection b., paragraph 1, credit card companies are allowed to continue imposing certain rate increases under certain conditions. However, the following subsections seem to systematically supercede each of those conditions. This makes it practically impossible for credit card companies to impose sanctions against abusers and offenders, at least during the first year.

Section 4 seems a little ambiguous to me. In proposed subsection m, paragraph 1, it says that a consumer may elect to permit the creditor to complete transactions in excess of the authorized credit limit. In paragraph 4, it says "the election ... shall be effective until the election is revoked by the consumer orally or in writing." What it doesn't make clear is whether that refers to transactions within the same billing cycle as the original transaction in excess, or if it extends to other billing cycles.

Also, proposed subsection o prohibits over-the-limit fees in cases where exceeding the credit limit was due to a credit hold. I would suggest instead, Senator, requiring credit card companies to inform consumers of holds in a timely manner, and, if a consumer then attempts to make a purchase before the hold is resolved, an over-the-limit fee or other penalty be imposable.

Reading this bill, Senator, it seems that it was written more to protect credit cardholders, which is certainly in keeping with the spirit of the title. However, as a former businessman, I'm sure you would agree that corporations, especially lending corporations, have rights as well. As I wrote before, all individuals assumes risks when they sign their names. I largely feel this is a good bill; but I think, with respect to the principles of a free market system, it is the buyer who should beware.

Thank you for your consideration, Senator.


Stephen Monteith

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