Dear Senator Dodd: A Credit Card Holder's Bill of Rights

After this week's hearing on the credit card industry, Texas consumer lawyer Craig Jordan sent the following letter to Chris Dodd, outlining a "Credit Card Holder's Bill of Rights." I asked Craig if he would let us reprint the letter here because I thought our readers would find his commonsense proposal worth reading.

Dear Senator Dodd:

I am a consumer lawyer with over 20 years experience representing consumers, both as an assistant attorney general for the State of Texas and as a private attorney. I commend your recent hearings on the credit card industry and I hope that you will take action to stop some of the serious problems the industry causes for consumers.

I believe, based upon my daily representation of consumers with problems relating to their credit cards accounts, that the industry has entirely lost touch with the basic concepts of fair play and honest dealing. To remedy the most serious problems I have published on my law firm website a credit card holder's bill of rights:

Credit Card Holder's Bill of Rights

1. No credit card company shall hold a card holder in default for any reason other than failure to make timely payments on the account being declared in default.

2. No credit card company shall change the interest rate payable on the existing balance of an account except pursuant to a previously agreed variable rate agreement in which the interest rate is tied to a published market rate.

3. No credit card company shall change the interest rate payable on future transactions unless the card holder has a meaningful opportunity to reject the change and pay off the account at the existing interest rate.

4. No credit card company shall make any change to the terms of its agreement with a card holder unless that change applies only to future transactions and the card holder has a meaningful opportunity to reject the change and pay off the account pursuant to the existing terms.

5. No credit card company shall charge any fee in excess of the reasonable average cost to the company of the event or circumstance which gives rise to the fee. Before charging any fee, a credit card company shall include in the card holder agreement an explanation of how the amount of the fee was determined and what relationship it bears to the cost of the event or circumstance giving rise to the fee.

6. No credit card company shall require a minimum payment that does not reduce the balance due on the account by less than 2%.

7. No credit card company shall mail a monthly statement to a card holder less than 21 days before the due date of the cardholder's next payment.

8. No credit card company shall fail to credit an account with payment on the date that payment is received and no credit card company shall require payments to be received prior to 5:00 p.m. local time at the place of receipt in order to be deemed received on that date.

9. No credit card company shall require a customer to submit any claim or grievance to mandatory binding arbitration.

10. No credit card company shall sell or refer a charged off account to a debt collector without providing the debt collector with the date upon which the account was last current before it was charged off and all other information necessary for the debt collector to comply with the requirements of state and federal laws relating to debt collection and credit reporting.

11. No credit card company shall fail to provide a copy of the account application, agreement, or history to a card holder upon request or charge any fee for doing so.

These are common sense principles that most American businesses already follow. It is unfortunate that it will take Congressional action to force the credit card industry to return to basic main street business practices.

Thank you for your consideration.

Craig Jordan

Comments

[Barbara Jones]

Note: Credit card companies should not be allowed to charge excessive fees for overlimit charges which have been brought about by fees brought on by the credit card company, and the excessive interest rates which they charge. Some people do not get money on a monthly bases, and this should be determined and charged in accordance. Credit card companies are now in the business to make their profit from customers by applying excessive fees and interest rates for one thing or another. Some even charge late fees if the bill is paid on the day that they request the money. This business is out of bounds and must be addressed. Please vote out people who do not believe in consumer rights and enforce those rights.

[Barbara Jones]

Note: Credit card companies should not be allowed to charge excessive fees for overlimit charges which have been brought about by fees brought on by the credit card company, and the excessive interest rates which they charge. Some people do not get money on a monthly bases, and this should be determined and charged in accordance. Credit card companies are now in the business to make their profit from customers by applying excessive fees and interest rates for one thing or another. Some even charge late fees if the bill is paid on the day that they request the money. This business is out of bounds and must be addressed. Please vote out people who do not believe in consumer rights and enforce those rights.

[NA]

The credit card companies ability to increase rates to over 20% and 30% harms middle and lower income individuals who carry balances by creating a situation in which the consumer is almost forced to default or file bankruptcy. Often the interest rates can cause credit cards to go over the credit limit, creating fees, lowering credit scores, and thereby increasing percentage rates even further. Many times the consumer has paid enough payments to more than cover the original loan, however the interest rates were so high that the balances simply increase. When consumers call credit card companies requesting a lowered interest rate because of fear of default, the credit card companies tell consumers their choice is to pay or default. Defaulting (and to a lesser extent late payments) causes difficulty in obtaining future loans to buy a home or vehicle, obtain security clearances, maintain security clearances for military members and federal employees, and may prohibit a person from obtaining a job in both the public and private sector as many employers are now running credit background checks as part of the hiring process. It in essence puts the consumer in a hostage situation to pay unfairly high interest rates with the threat of their negatively impacting their consumer credit reports and risk their livelihoods and standard of living for the next 10-20 years. If this isn't loan sharking and shylocking I don't know what is. It only became legal after the depression to boost the economy and now the banks and credit lending institutions have more power than the consumer. It has run rampant and interest rates of 20%, 30%, and 40% significantly impact lower, lower middle, and middle income consumers. The only people who can stand up for us as consumers are our elected officials. Lower through middle income individuals often use credit cards to purchase basic necessities, such as food, health care, and clothing for themselves and their families, as well as vehicle maintence (tires & repairs) and gas. Federal Usuary laws should be imposed and 30% is still too high!

I understand that it is the credit cards which have averted a major economic crisis in this country for the lower and middle income population (which would flow up). However, if the federal government wants to give incentives to credit card companies through tax breaks in order to keep the lending instutions profitable to allow the economy to continue to move forward and impose a lower interest rate cap of perhaps 10-15% then this will decrease the burden on the consumer and the default rate while giving the lending institutions the incentive necessary to continue to continue to keep the credit dependent economy stimulated.

[tv bracket]

It should provide benefit and safety for both credit card users and the providers. Moreover, it could hopefully keep our spending-based economy going. That is if the Senator should decide to bring the matters up and win the congress.

[jennifer]

im from california we have this credit card use to be a providian and now they call it wamu cards and we have 3 credit cards under their company when we recieved the our tax refund. we pay 900.00 for the 1st one and 633.00 for the other one and 500.00 for the other one and then after we pay them 3 days later we check the balance on our credit card on wamu card i was surprise that the money we put on this credit card we cant use them because they lower the credit limit a soon the got the payment.so now our credit card is max out again we cant even use this card just in case of emergency a total of 2,000 dollars went to drain and still my minimum still high because of the interest rate is 29.99% . i don't know what to do i was so mad and call the wamu card they told me that they send me the letter which i haven't receive it yet it takes 10 business days to mail it so they minus the credit limit and they notify us later .which is i felt is wrong . i dont know what to do can you give advice please

thank you

jennifer

[Jill M]

I have email from a credit card company that states that i have an offer of no balance transfer fee presently until 4-7-08, but when I go online to my "offers" it isnt there, and when I ask they keep cut and pating another offer. Can anyone tell me my rights in this case?

[Jill M]

I have email from a credit card company that states that i have an offer of no balance transfer fee presently until 4-7-08, but when I go online to my "offers" it isnt there, and when I ask they keep cut and pating another offer. Can anyone tell me my rights in this case?

[Idias Mims]

I have a credit card that went into collection about 31/2 years ago. I lost my job an was not able to continue to make payments. I contacted the collection agency last year to see about making payment arrangements with they denied because they could only make arrangements if I could pay it off in 3 months. I was not able to do that. They recently sold my account to an a law firm. I have contacted them to see about making payment arrangements. They wanted to settle for $25,000 and wanted it in 3 months. I am not able to do that. I wanted to know if they can enter a judgement against me for the balance with is monthly fees and other charges. They said they could put a lien against my house or car. What is the rule pertaining to this in the state of Texas.

Thanks for any information.

Idias Mims

[Debbie Valdovinos]

Can a credit card company remove an amount from your statement for fraudulent use of your card using cash advance checks that were stolen from the card-holder and then a month later tell you they are going to put that amount back on your card?
If someone could please answer this as soon as possible, would be greatly appreciated.
Thanks,
Debbie

[Cheryl Wells]

It is past time for Congress to get involved. The entire credit industry (along with how the credit reports and FICO scores are being used to figure insurance rates) is out of hand. The two actually go together. I discovered this when I didn't receive the lowest quote on my house insurance because of my credit report. My credit is actually excellent. However, because I had refinanced my house (to get a fixed, lower rate) and because I had opened a Barnes & Noble credit card (so that I could get discounts on books)within the last 3 years, this meant I couldn't get the best rate. I learned that all of this is determined by computer models that are secretive and that vary from company to company. I would like to require insurance companies that use computer models to set rates to have a process whereby a consumer could contest their rate and have an actual person doublecheck what the computer did. For instance, my husband and I used about $29,000 of the equity in our home to do some home updating and also to "buy back" years of service for our teacher retirement. During this time, we were also paying $1,000 a month into a retirement account. If we get in a bind financially, we can stop paying into this retirement account at any time. However, since we "used" our home equity, the computer model sees that as a negative -- even though it should not affect the insurance on our house at all. (We have never had a house claim on our house at all, nor do we live in a coastal area or in a flood plain.) So screwy stuff is happening a lot with the credit reports and credit scores. The consumer needs some recourse. Is there a consumer group we can join that is working on this issue? I would certainly like to challenge the blind use of these computer models. At the very least, the companies need to disclose what the models are measuring and there should be a way to challenge some computer's results by having a "real person" review the actual risk and set a quote.

Thank you,

Cheryl in Texas

[CheriLea Morton]

Here is something that should be added to your bill. About a year and a half ago my daughter, who lives in Virginia, I live in Ohio came to Ohio. When she arrived I noticed that the tires on her car were in bad condition. She had brought four of my grandchildren with her. It scared me to think of her driving back to Virginia with these children (they are all under 10).on the tires. We went over to the Tire Man store in Rossford Ohio to get her some tires. I had no problem signing on a card with her to get the tires. The tires cost $678.00. She was to make the payments. The bills went to Virginia.
The card company GEMB/ACCC issued a card to her for $2800.00. When I found out what the limit had been set at I called them and told them I wanted off the card and that I would not be responsible for that high of a credit limit. They told me they could set the limit where-ever they wanted. Anyway as luck would have it, my daughter was involved in a nasty accident in August of 2006. With no money coming in she filed Chapter 13 so she could get her life back in order. I was told this would not affect me. Well it did. Not only are they reporting this account as delinquent on my credit report, it has tanked my credit score. Again I called GEMB/ACCC and asked to talk to the collection division. I was told they could not talk to me because of the Chapter 13, but also I could not pay the card off. They would have to give the money to the Virginia Courts. I told them I was not in Bankruptcy and that my name was on that card and that they could not hold me responsible if they would not talk to me. When my daughter filed Chapter 13 there was $2000.00 on the card, it is now over $3000.00 because of non payment and late charges. I have never recieved a late notice, a bill, or a disclousure notice. I don't think this is fair and I hoping my attorney finds this to be illegal in Ohio.

[babaloo]

I definitely agree with the Bill of Rights. It's not fair that credit card companies delay sending out their bills, just so they can feather their nests even more.
They also allow themselves to change (hike!) your interest rate without warning if your credit report changes - so you would get double-shafted for identity theft (once by having your funds ripped off and then by the credit card company raising your rate).
We NEED this bill of rights now!

[Ken Houghton]

So if you owe $2,000, the minimum payment cannot be less than $40.

I would suggest politely that if you can't make a $40 payment on a $2,000 debt (and I've been there) then it's probably time to stop using that card.

Which is the key, of course. If Providian cuts the minimum payment to $20 or $30, then you're still "paying on time" and thinking you can use the card. With the payment not even covering the interest accrual if the rate is 18% or higher.

[Craig]

#6 is aimed at negative or negligble amortization payment schedules. Providian used to offer a card with a miniumum payment so low that the payoff period was measured in decades because the interest charges were almost equal to the payment amount.

[Brian]

I don't understand #6. Can you explain with an example?