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Halfway to Sanity: House Passes Credit Cardholders Bill of Rights

The Castle Law Office offers legal help for St. Louis residents who are going through the bankruptcy process. As experienced bankruptcy attorneys, we know full well that most Americans are one financial crisis away from financial ruin. All it takes is an illness, the loss of a job, or the very real threat of market instability to put anyone in debt beyond what they can afford. At the Castle Law Office, we help those who are suffering from debt get their lives back on track, and we are often able to do so without costing our clients their homes or other property. If you or a loved one in the St. Louis area is considering bankruptcy, contact the Castle Law Office for a free legal consultation today.

In the midst of all the justifiable concern about the bailout proposals that are floating around Washington, D.C., a very important piece of legislation was passed that was, for the most part, completely overlooked.

Almost everyone in America knows about credit card debt, and as a result almost everyone in America is well aware of the absurd rules governing your payments. Credit card companies can change the rates, charge you for two months worth of interest even if you pay most of your bill off on time, raise your rates if you are late on any other payment, and put your monthly payment towards the part of the balance that has the lower interest rates. The rules are that there are no rules. Loan sharks don’t even engage in this sort of thing.

Fortunately for most of us, our leaders in Congress have taken the first step on the path to making the methods of the credit card companies civil. They recently passed what is called the “Credit Cardholders Bill of Rights,” and it rectifies many of the terrible practices that have kept so many Americans in perpetual debt for decades.

Among the provisions in the bill:

- A prohibition of retroactive interest rate hikes. This is when the credit card company raises the rates on debt that you have already accrued. This is often unfair, as many people use their credit cards under the assumption that the rates would stay the same.

- A prohibition of changing the rates whenever and however they want.

- A prohibition of outside influence of rates. This is when your credit card penalizes you because you are late on a different payment, or you get a credit card from a department store or other merchant.

- Severely limiting two-cycle billing. This occurs when you pay your bill in full one month, and then if you don’t pay it in full the next month, they add two months worth of interest to your bill.

- Severely limiting lower interest payment distribution. Often, many credit cards have different interest rates for different types of debt. Cash advances, for instance, may have a higher interest rate than purchases made with credit cards. Rather than put all or the majority of your payment towards the higher rate, credit card companies will often put the payment towards the lower rate debt, which maximizes the amount of interest that they will make.

Legislation like this is long overdue. When defending their practices, credit card companies all offer some variation of “our cardholders signed a contract” as an excuse for their behavior. We have to wonder what sort of contract is it if one side can change the rules whenever they want and the other side has no say in the matter. That isn’t a “contract” as much as it is “servitude.”

While the legislation has passed in the House, there is still a long way to go. It is impossible to find any legislation that has ever been hurried through the Senate, and you can be sure that even despite the financial quagmire that we as a nation find ourselves in, the banking industry still has a great deal of influence in Washington. You should also consider that the White House came out against the bill, on the grounds that it “reduces the ability of lenders to price risk.” We respectfully submit that the time to do that is before the credit card is issued. Credit cards companies never do that. They make it ridiculously easy for anyone to get credit cards, offering giveaways at concerts and football games, and then “price the risk” however they see fit.

Credit card debt is crippling the St. Louis area. As bankruptcy attorneys, we here at the Castle Law Office see the results of these horrible lending practices on a daily basis, and often one of the biggest debts that our clients are finding it impossible to get out from under is the plastic debt that they carry from month to month.

If you or a loved one in St. Louis is suffering from severe debt and is considering filing for bankruptcy, contact the Castle Law Office for a free legal consultation today.

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