Senator Asks Credit Card Companies to Comply with New Rules
U.S. Senator Robert Menendez (D-NJ) is calling on the nation's credit card companies to comply with federal regulators' new rules against "unfair and deceptive practices" sooner than they have to.
Last week, the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration finalized a new set of regulations that would ban such practices as raising interest rates on existing balances unless a payment was more than 30 days late, charging late fees without giving the borrower a reasonable amount of time to pay and applying payments so that debts with higher interest rates are repaid last.
But the rules won't go into effect until July 1, 2010, a decision that angered many consumer groups.
"Because of the great danger facing our economy, it is important that you institute the protections, as outlined in the recent regulations, as soon as possible," Menendez, a member of the Banking Committee and author of the Credit Card Reform Act wrote. "In this current economic climate, many families are struggling to pay their bills on time and are making enormous sacrifices in order to keep up with their payments. But without relief, between today and a year from next July, the current economy combined with the continuation of these harmful practices may make it impossible for these families to continue to pay their bills on time."
Menendez sent the letter last week to the chief executive officers of American Express, Bank of America Corp., JP Morgan Chase & Co., Capital One Financial Corp., Citigroup Inc., and Discover Financial Service.
Menendez's Credit Card Reform Act would prohibit other practices not covered by the new regulations, such as aggressive marketing to college students.
Some members of Congress have also said they plan to introduce their own bills next year to codify the Fed's rules and ban other unfair practices sooner than July 1, 2010.
By Nancy Trejos |
December 23, 2008; 7:00 AM ET
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