WASHINGTON, DC - In an effort to end abusive credit card practices and protect consumers, the Senate Banking Committee today passed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act. Cosponsored by U.S. Senator Jack Reed (D-RI), this legislation limits abusive fees and penalties; prohibits credit card companies from unfairly increasing interest rates on most cardholders in good standing; requires a 45-day notice before imposing a higher interest rate; and prohibits double-cycle billing, one of the most costly ways for creditors to calculate interest charges for a given billing cycle.

"We need to reform the credit card industry and put a stop to unfair billing practices. This bill is a step in the right direction," said Reed, a member of the Banking Committee. "For too long the credit card companies have been able to issue cards with convoluted terms and hidden fees. This legislation will help bring an end to these deceptive practices by instituting common-sense limitations and increasing consumer disclosures."

The CARD Act is supported by several key consumer groups, including the Consumer Federation of America and Consumers Union. Specifically, the CARD Act will:

• Protect cardholders who pay on time;
• Prohibit unfair application of card payments;
• Protect consumers from "any time, any reason" interest rate increases and account changes;
• Prohibit issuers from using a consumer's card history with another creditor to raise interest rates ("universal default" ban);
• Prohibit issuers from charging interest on debt that has already been repaid;
• Require credit card companies to disclose the time it would take to pay off a balance when making minimum monthly payments;
• Require statements be mailed to borrowers at least 21 days before the payment due date, up from 14 days; and
• Protect younger consumers from aggressive credit card solicitations by requiring borrowers under the age of 21 to get the signature of a parent, unless there is proof of independent income or completion of a financial education course.

In December of 2008 federal regulators finally approved a rule preventing credit card companies from unfairly using deceptive bait and switch lending practices. However, the changes don't take effect until July 1, 2010. Senator Reed has urged the Federal Reserve to monitor credit card interest rates and consider accelerating the effective date to prevent credit card companies from increasing fees on consumers before the new regulations take effect. The bill passed today by the Banking Committee contains an accelerated effective date.

"Passing this legislation would tighten restrictions on credit card companies and prevent them from taking further advantage of consumers," concluded Reed.

The bill, which passed the committee by a vote of 12-11, now goes to the full U.S. Senate for consideration.