Tester: If you own a credit card, change is on the way

Senator helped write legislation to reform credit card industry

As the U.S. Senate takes up bipartisan legislation to restore fairness and honesty to America's credit card industry, Senator Jon Tester today explained how the bill will affect all Montanans who use plastic.

As a member of the Senate Banking Committee, Tester helped write the Credit Card Accountability, Responsibility and Disclosure Act — commonly known as the CARD Act.

"If you own a credit card, change is on the way thanks to the CARD Act," Tester said. "Credit cards are part of everyday life in Montana. I helped write this reform bill because Montanans expect more common sense, honesty and fairness from the credit card industry."

The CARD Act
How will it affect you?
REQUIRES MORE NOTICE The CARD Act requires companies to give cardholders 45 days notice of interest rate and fee and finance charge increases, advance notice of any significant changes in terms of the credit card account, and requires clear notice of right to cancel a credit card when the APR is raised or significant terms are changed.

  • Bans double-cycle billing and prohibits credit card companies from imposing interest charges on any portion of a balance in the current billing cycle that is paid by the due date.
  • Prohibits universal default (raising interest rates on cardholders who pay their bills on time) on existing balances and prohibits increasing rates, fees, or finance charges on existing balances.
  • Prohibits charging overlimit fees on a credit card account unless the customer allows the company to complete overlimit transactions on the account.
  • Prohibits credit card companies from charging a fee to pay a credit card debt, whether by mail, telephone, electronic transfer, or otherwise, except for expedited service by a live service representative.
  • Requires penalty fees to be reasonable and proportional to the violation.
  • PROVIDES AN EXTRA WEEK TO PAY BILLS The CARD Act requires credit card statements to be mailed 21 days before the bill is due (the current requirement is 14 days).
    PROTECTS YOUNG (COLLEGE-AGE) CUSTOMERS The CARD Act requires companies that offer credit cards to Americans under the age of 21 to get an application that contains: 1) the signature of a parent, guardian, other qualified individual age 21 or older who will take responsibility for the debt; or 2) proof indicating an independent means of repaying debt.
    LOWERS INTEREST RATES Companies cannot increase rates on a cardholder in the first year after a credit card account is opened. The CARD act also requires promotional interest rates to last at least six months.
    REQUIRES INTEREST RATE REVIEWS Companies that increase a cardholder's interest rate must periodically review and decrease the rate if indicated by the review.
    BANS UNREASONABLE DEADLINES The CARD Act prevents credit card companies from setting early morning deadlines for credit card payments.
    IMPROVES GIFT CARDS The CARD act requires plastic gift cards to be valid for at least five years.

    Americans owe more than $950 billion in credit card debt. Seventy-three percent of American families have credit cards with an average balance of $7,300.

    During a speech last week on the Senate Floor, Tester shared several stories of Montanans who have struggled with credit card companies. Tester's entire floor speech is available online.

    The Senate is expected to pass the CARD Act later this week.