Senate Passes 'The Credit Cardholders' Bill of Rights Act'

[Editor's note: The following is a press release from Demos.org.]

Washington, DC--Today, the Senate passed legislation to rein in many of the most unfair and deceptive credit card industry practices.  The Credit Cardholders’ Bill of Rights Act of 2009, introduced in the Senate by Sen. Christopher Dodd (D-CT), a version of the similarly named bill that passed the House earlier this month, was approved by an overwhelming 90-5 bipartisan margin. Tamara Draut, Vice President for Policy and Programs at Demos, a non-partisan policy center that supports legislative measures to re-regulate the credit card industry and bolster America’s household economies, issued the following statement on the legislation:

"Today, for the first time in 20 years, the Senate has taken a stand on behalf of American households who are in dire need of relief from outrageous and predatory credit card practices. As the financial sector continues to reap the consequences of the mortgage meltdown, banks are brazenly increasing interest rates and fees on their credit card customers in order to cover losses in other areas. The only reason this is possible is because in the absence of almost any regulation, issuers have tilted the playing field heavily in their favor.

"These practices come at a time when families are already on the financial edge, having weathered a long-term economic shift towards stagnant wages, low savings rates and higher costs.  By the time of the recent economic downturn hit, they had been turning to credit cards for years just to cover basic costs like gas, groceries and utilities, and to deal with emergencies, such as an unexpected medical expense.

"Demos research shows that, since the late 80s, credit card underwriting practices have shifted the cost of credit—their revenue stream—to individuals least able to afford it, while at the same time generating some of the highest profits in the entire banking sector, a record $18 billion in fees last year alone. Low-income families and households of color, primarily African Americans and Latinos, bear the brunt of the cost of credit card deregulation through excessive fees and high interest rates. The lack of common-sense protections has made this recession much deeper and more painful for these families.