WASHINGTON - U.S. Senator Tom Udall, D-NM, announced the implementation today of major reforms passed last year to protect consumers from unfair or dishonest acts by credit card companies.
Last spring on the floor of the U.S. Senate, Udall fought for changes to the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, which requires greater disclosure of credit card terms, prevents card companies from raising rates unfairly or retroactively and charging misleading late fees, and provides new protections for underage consumers.
"For far too long, credit card companies have used deceptive and unfair practices to take advantage of responsible consumers," Udall said. "With these new rules, we hold credit card companies accountable by protecting Americans from unscrupulous industry practices and giving them the tools they need to make responsible financial decisions."
Over the last three decades, as credit card companies have taken advantage of weak rules to aggressively market their product, credit card debt has gone up 360 percent and debt-related bankruptcies have skyrocketed. One study has shown that one-third of bankruptcies are caused by credit card debt.
Among other provisions, the CARD Act:
- Outlaws "universal default," a practice by which card companies raise interest rates on every one of a customer's accounts in response to a default on a single account, even if that default is on an account with a different lender;
- Prevents arbitrary interest rate increases;
- Requires a 45-day notice before an interest rate increase;
- Gives consumers the option to close an account when changes occur; and,
- Requires credit card companies to issue monthly statements in simple language - including due dates and fees.
