Rep. Kilroy Calls on Credit Card Companies to Halt Unfair Rate Hikes

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Credit Card Holders’ Bill of Rights will curtail predatory practices, but Kilroy wants to make sure companies are not taking advantage of the timeframe to adversely affect constituents

October 7, 2009 -- WASHINGTON -- Congresswoman Mary Jo Kilroy today joined 18 House members calling on country’s major credit card companies to not change the terms on consumer credit card accounts ahead of federal credit card reform legislation slated to go into effect early next year.

“Too many of my constituents are calling my office to complain about arbitrary rate increases by credit card companies,” said Rep. Kilroy said. “The Credit Cardholders’ Bill of Rights was set for February 2010 to give credit card companies time to implement the new federal regulations – not so they could figure out ways to raise rates before this strong protection for consumers was implemented. America’s credit card companies need to do the right thing and pledge to halt unfair interest rate hikes on our families.”
Kilroy helped pass sweeping legislation in May to give credit cardholders safeguards against unfair and predatory practices by credit card companies as a co-sponsor. The bill was passed overwhelmingly in the House (361-64) with 113 Republicans voting with 248 Democrats. According to Consumer Reports, last year credit-card issuers imposed $19 billion in penalty fees on families with credit cards and this year, card companies will break all records for late fees, over-limit charges, and other penalties, pulling in more than $20.5 billion.

The Credit Cardholders’ Bill of Rights reforms the consumer credit system and provides crucial protections by:

* Ending unfair and arbitrary interest rate increases.
* Letting consumers set “hard limits” on cards to avoid over-the-limit fees.
* Ending unfair penalties for consumers that always pay their bill on time.
* Requiring companies to apply payments to the highest interest rate first.
* Protecting consumers from due date gimmicks that cause late payment fees.
* Barring credit card companies from issuing cards to minors.

Full text of Kilroy’s letter, which was also sent to the Chief Executive Officers of JPMorgan Chase & Co, American Express Co, Capital One Financial Corp, and Discover Financial Services:

October 7, 2009

Vikram Pandit
Citigroup Chief Executive Officer
399 Park Avenue
New York, NY 10022

Dear Mr. Pandit,

We have received an increasing number of complaints from our constituents regarding practices in the credit card industry unreasonably raising rates in advance of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) reforms. As you know this critical legislation was signed into law by President Obama several months ago.

Many of these unreasonable increases would be prohibited under the Credit CARD Act. The implementation of these necessary reforms should not be taken as an indication that the industry should take advantage of consumers now before the prohibitions come into effect. According to a report by The Pew Charitable Trust, interest rates for cardholders have increased an average of 20% this year from issuers who are rapidly changing account agreements, revoking promotional rates, and imposing interest rate increases on existing balances, including those less than 30 days past due. Such actions violate the notions of fair play and create an economic burden on our constituents, many of whom are struggling to make ends meet.

What makes this situation particularly troubling is the fact that the effective date for the majority of the provisions in this legislation was set for February of 2010 to give credit card companies time to implement the new federal regulations – not additional time to violate the spirit of the law by changing the terms of agreements, including raising interest rates on consumers.

In response to such actions, Representative Carolyn Maloney and Chairman Barney Frank have suggested that quicker implementation of The Credit Card Act is necessary. Representative Maloney has introduced H.R. 3639, which has been referred to the House Committee on Financial Services.

Yesterday, Bank of America announced that due to concerns from their customers, they would not implement any changes to customer agreements that would re-price consumer credit card accounts. Bank of America’s actions are a good first step; now the rest of the industry should follow their example.

We urge you to immediately reconsider your practices regarding raising credit card rates prior to the full implementation of the Credit CARD Act. We encourage you to follow the appropriate and responsible example set forth by Bank of America.

Sincerely,

Mary Jo Kilroy
Member of Congress

Betsy Markey
Member of Congress

Dina Titus
Member of Congress

Ed Perlmutter
Member of Congress

John Salazar
Member of Congress

Shelley Berkley
Member of Congress

Steve Driehaus
Member of Congress

Harry Teague
Member of Congress

John Adler
Member of Congress

Suzanne Kosmas
Member of Congress

Ben Ray Luján
Member of Congress

Marcia Fudge
Member of Congress

Neil Abercrombie
Member of Congress

Martin Heinrich
Member of Congress

Henry Cuellar
Member of Congress

David Wu
Member of Congress

John Boccieri
Member of Congress

Phil Hare
Member of Congress

CC: JPMorgan Chase & Co
American Express Co
Capital One Financial Corp
Discover Financial Services

Source: Congresswoman Mary Jo Kilroy