Sen. Stabenow Co-Sponsors Legislation to Protect Consumers from Unfair Credit Card Company Practices

November 2, 2009 -- WASHINGTON – U.S. Senator Debbie Stabenow (D-MI) today announced her support for the Credit Card Rate Freeze Act of 2009, by signing on as a co-sponsor. This legislation will immediately freeze credit card interest rates on all existing balances for consumers. The bill serves as a supplement to the consumer protection measure, the Credit CARD Act, which passed earlier this year.

Under that law, beginning February 2010, credit cards can no longer arbitrarly raise interest rates, fees and finance charges on a customer’s existing balance. Credit card companies are currently using the grace period as an opportunity to raise interest rates and fees before the Credit CARD Act goes into effect.

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“It is unfortunate that cardholders have to worry about arbitrary rate increases from their credit card company in this climate. Consumers deserve to be protected,” said Stabenow. “This legislation will go a long way in ensuring that cardholders do not have to face unfair increases of interest rates or fees, as firms will no longer be able to unfairly increase rates in anticipation of the new regulations.”

Beginning this past August, the Credit CARD Act requires 45-day advanced notice of any potential rate increases and gives customers the opportunity to opt out of the increase and pay their existing balances off over time at the old rate. However, the provisions that make it more difficult to raise rates and fees do not go into effect until February 2010. The Credit Card Rate Freeze Act of 2009 will immediately prohibit all card issuers from increasing any annual percentage rate, fees or finance charges applicable to any outstanding balance, except as permitted under the Truth in Lending Act (TILA). Card issuers also would be prohibited from changing the terms governing repayment of any outstanding balance, again except as set forth in TILA.

Stabenow is joined by Senators Chris Dodd (D-CT), Michael Bennet (D-CO), Sherrod Brown (D-OH), Barbara Boxer (D-CA), Tom Harkin (D-IA), Carl Levin (D-MI), Robert Menendez (D-NJ), Jeff Merkley (D-OR), Jack Reed (D-RI), Charles Schumer (D-NY), Jeanne Shaheen (D-NH), John Tester (D-MT), and Mark Udall (D-CO), Mark Warner (D-VA), and Sheldon Whitehouse (D-RI), in cosponsoring the legislation.

Source: Senator Debbie Stabenow