H.R. 5244: The Credit Cardholders' Bill of Rights Act of 2008

I had just about given up on Congress when they enacted the Bankruptcy Abuse Prevention and Consumer Protection Act back in the spring of 2005 [1][2][3]. The bill gave the banks what they wanted, and made it harder for those in financial dire straits to declare bankruptcy, even poor folks who got into trouble due to high medical bills. The new law makes it more difficult for deadbeats to get away with not paying their bills -- and I have no problem with that -- but it also punishes those who deserve the kind of help that only bankruptcy can provide.

Now it seems that Congress is on its way back to representing the people instead of focusing on doing whatever the Corporate America-controlled lobbyists want.

Last week, the House Financial Services Committee passed by a vote of 39-27 the "Credit Cardholders' Bill of Rights Act" (H.R. 5244.) If this bill is passed into law, things like double-cycle billing and universal default will become illegal. This bill still has a long way to go before becoming law, but it's a very good start. The bill was introduced by Democrat Representative Carolyn Maloney of New York on February 7^TH, 2008, and still must go through debate, a vote in the House, a vote in the Senate and finally a signature by the President. Godspeed.

Don't get me wrong. I love credit cards, especially 0% cards that also feature generous cash back rewards. If this bill becomes law, much needed checks would be put into place to keep the credit-card banks from abusing their considerable power, and consumers would be able to spend with their plastic, secure in the knowledge that the credit-card playing field is reasonable and fair. Nothing wrong with that. That's the American way.

I wouldn't be surprised if passing H.R. 5244 into law boosted consumer spending; more spending is something the U.S. economy needs right now and for many months ahead[1][2]. In my humble opinion, I don't think the recent stimulus payments will do much to ward of a recession. I think most folks used the bulk of that money to pay down debt and/or shore up their savings. If we must endure a recession, let's hope that it's short and shallow. Amen.

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New Minimum Payment Rules Starting To Kick In

Thanks to The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005*, the monthly minimum payment due on credit card balances has been raised from 2% of your credit card balance to 4%. This change affects every single credit card holder in the United States, especially those who often find themselves paying the minimum amount due each month.

The new rule is a good one and has the laudable goal of helping consumers pay off their credit card debt quicker. But doubling everyone's minimum amount due will almost certainly cause serious problems for folks who are struggling financially, and may even force people who otherwise would have been able to manage with the old 2% minimum standard into bankruptcy.

The new minimum payment rules are starting to kick-in with the credit cards I have. Monthly minimum payments that used to be $40 are now $80. This is OK with me, for I have been in the habit of paying 3 times the minimum amount due each month on my credit cards anyway. But I can't help but feel a little strained, because I always felt safe in the knowledge that I could always afford the minimum amount due if I ever experienced a financial meltdown. Now, I think that if I suddenly and unexpectedly ran into hard times, I might not be able to handle my monthly credit card payments. I wouldn't be forced into bankruptcy, but I would be forced to open more lines of credit in order to cope, and that's not a good thing.

A few days ago, I decided to take advantage of a Citibank balance transfer offer: 3.99% APR for the life of the transferred balance until the transferred balance is paid in full. A decent deal, which will certainly save me a lot in interest charges, and so far I haven't had any problems with any of the Citibank credit card accounts I have, so I think it was the right move. Of course, I now have to stop shopping with my favorite Citibank card, because all payments I send in for this card will now go toward paying down the transferred balance, leaving all new purchases subject to interest charges @ the standard rate (which for this card is 9.49%.) And if I slip-up and make a purchase on this card, the only way to stop the interest from piling up @ the standard rate is by paying off my entire credit card balance, and I don't have that kind of money right now. So the balance transfer game continues.

My latest credit card balance transfer transaction has enabled me to completely payoff (well, not exactly "pay off," but you know what I mean) my Providian and my Chase credit card accounts. I am, therefore, expecting both credit card companies to respond my empty accounts by offering me some great balance transfer deals in the near future. Will I take advantage of them? Probably! The last time I paid off my Providian account, they offered me an irresistible deal: 1.99% APR on transferred balances until the transferred balance is paid in full. That's a killer deal, and I'm hoping that they offer it again.

So stay tuned to the balance transfer blog. I'll post again when I have more news of my adventures with credit card balance transfers.

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