The top leaders of the Senate Banking Committee — Sen. Chris Dodd (D-CT) and Sen. Richard Shelby (R-AL) — have reached an agreement on a bill that will rein in various practices of credit card companies. A vote in the Senate is expected later this week or next week. The bill restricts credit card companies from raising rates on outstanding balances and gives consumers more protections against a variety of deceptive tactics used by credit card companies. A summary of the bill from the Senate Banking Committee is available here (PDF). The House has already passed its own version of the bill, and President Obama has been a strong supporter of the legislation. Key parts of the Senate bill are below (from the Senate Banking Committee):
–Protect consumers from arbitrary interest rate, fee and finance charge increases and prohibit universal default on existing balances
–Prohibit interest charges on paid-off balances from previous billing cycle (also known as a double-cycle billing ban)
–Require payments to be applied first to the credit card balance with the highest interest rate
–Protect students and other young consumers from aggressive credit card solicitations
–Ensure that payments are fairly allocated to the account with the highest interest rate first
–Require greater disclosure of rates, terms and billing details by credit card companies
–Establish tougher penalties for companies that violate the law
