Congress pushes for credit card relief

New restrictions on lenders will take effect in 2010, but several in Congress are leading the campaign for faster reform.

By Neil deMause
Last Updated: January 19, 2009: 8:46 AM ET

(CNNMoney.com) -- With last week's re-introduction in Congress of a bill to rein in what critics say are abusive credit card practices, the stage is set for a Washington battle that will determine whether entrepreneurs and other credit card users get relief soon from soaring rates and fees.

The Credit Cardholders' Bill of Rights was introduced Thursday by Rep. Carolyn Maloney, D-N.Y., in the House, and Senators Mark Udall, D-Colo., and Charles Schumer, D-N.Y., in the Senate. The legislation would take a number of steps to restrict credit card issuers, including:

* Banning retroactive rate increases on existing balances for cardholders in good standing. Rates could still be raised if a customer were more than 30 days late with a payment.
* Requiring 45 days' notice of all rate increases on new charges.
* Banning "double-cycle billing," which allows fees to be charged for balances that were already paid off.
* Allowing cardholders to cap how much they can charge to their cards, to avoid overdraft fees.
* Outlawing "universal default" clauses, which automatically hike rates on a card based on unrelated financial activity, such as being late paying another bill.

"A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees," Maloney said in a press statement. "This bill levels the playing field between card companies and cardholders while fostering fair competition and free market values."

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