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Credit Cardholders' Bill of Rights: Senate Nixes 15% Interest Rate Cap

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By Admin on May 14, 2009 8:59 AM

From Capitol Hill comes this progress report on passage of credit card reform legislation that some are calling a "Credit Cardholders' Bill of Rights": the U.S. Senate has voted to reject a measure that would put a 15 percent cap on interest rates that banks can charge cardholders. But the bill is moving forward, and passage could come some time this week.   

The 15 percent interest rate ceiling was proposed by Senator Bernie Sanders, an Independent from Vermont, who argued that such a cap was necessary to give consumers relief from (sometimes arbitrary) card rate increases that can reach 25 to 30 percent, Bloomberg.com reports.

The Credit Cardholders' Bill of Rights has already won easy approval in a 357-70 U.S. House of Representatives vote, but obviously there are still some kinks to be worked out in the Senate. President Obama has voiced his support for the credit card reform legislation, and is expected to sign the bill once it reaches his desk.

Features of the new credit card reform legislation include increased protections and stricter notice requirements for interest rate increases, elimination of "double cycle" billing and other hidden penalties, enhanced flexibility and grace periods for payment due dates, and the opportunity for cardholders to set their own credit limits. Learn more: What Might a Credit Cardholders' Bill of Rights Look Like? 

While lawmakers look for ways to level the credit card playing field for consumers, the New York Times Magazine reports that banks and card companies are changing their business models to put more focus on their customers' lives and mindsets, and assessing who is more apt to pay their debts: "Gone are the days of handing out cards willy-nilly and hoping that the cardholders who dutifully pay up will offset the losses from those who default."