Movement on Menendez Credit Card Bill

I have blogged about Senator Robert Menendez before. He's a Cuban-American Democrat from New Jersey and is currently the only Latino in the Senate. Last year and again this February, Senator Menendez has introduced bills to stop some of the abusive practices by credit card companies. The bills haven't moved forward, but now President Obama wants to protect cardholders from unfair rate increases, late fees and penalties, which could bring more attention to the current Menendez proposal.

Menendez's bill is called the 'Credit Card Reform Act of 2009,' and it seeks to "protect consumers, and especially young consumers, from skyrocketing credit card debt, unfair credit card practices, and deceptive credit offers." In recent years, we have seen skyrocketing assessments and fees attached as penalties for cardholders on multiple accounts even if the person is late on just one account. This bill would put a cap on interest rate increases and ban retroactive rate hikes.

In regards to this measure and President Obama's efforts to address credit card reform, Senator Menendez wrote the following in a letter to US Treasury Secretary Geithner:

"Unfortunately, at a time when consumers are most vulnerable, several major credit card companies are exacerbating the situation by unilaterally raising interest rates, even on consumers who have never been late on payments. This is not risk-based pricing; rather, it is merely a way for issuers to recover losses they are incurring at the expense of American families.  Forcing consumers to pay for the mistakes of credit card executives is not only unfair, it also threatens to push many more people into default and even bankruptcy."

My thought is that tackling this issue will be a win-win situation for both Menendez and Obama. The American people are tired of being held at the mercy of the banks, whether in their mortgages or credit card accounts. Too often young people are singled out by the credit card companies. We see this on college campuses frequently as well. People are extended credit without really knowing the terms of the agreements. Obama also wants the terms to be spelled out in "Plain English" so people understand what they are signing up for. I welcome this type of reform. Congrats to Senator Menendez for taking a stand against the deception in the credit card industry.