Congressman Chris Smith (NJ-04) today hailed the final passage of a House bill to protect American consumers from predatory credit card company practices.

            The House approved H.R. 627 today by a vote of  361-64. Smith voted for the measure.

            “This legislation contains valuable consumer protections,” Smith said. “People who have credit cards need to be safeguarded from some of the excesses of the credit card industry. This bill sets reasonable guidelines for credit card companies to treat their customers fairly.”

            The bill would allow credit card companies to increase interest rates charged to a cardholder’s existing consumer balances only if a payment is 60 days or more past due. It would prohibit rate increases during the first year after an account is opened and prohibit raising a special promotional rate for at least six months after account activation. 

            The bill forbids companies from issuing cards to minors who already have a card, or minors who are not financially independent, and sets debt limits for full-time college students. It also prohibits charging customers from being charged extra for paying a balance by phone, rather than mail. Rate increases would require 45 days advance notice. It also bans “double-cycle” billing, in which some card companies use an account’s average balance to assess interest, even if it is paid off monthly. The bill prohibits charging an over-the-limit fee unless a card holder explicitly elects to have the ability to charge over the limit, and requires credit card companies to periodically review rate increases to determine if the rate could be lowered because the cardholder is considered less risky.

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            An earlier version of the bill passed on April 30 by a 357-70 vote. The final bill, which passed the Senate yesterday by a 90-5 vote, now heads to the White House to be signed into law.

            Credit card companies have nine months after enactment to comply with the law.