Your credit-card rights: Time for reform legislation is now -- and you can help

NEW YORK -- News item: On Feb. 7 legislation called the Credit Cardholders Bill of Rights Act of 2008 was introduced into the House of Representatives.

The bill, HR 5244, was introduced by Rep. Carolyn Maloney, D-N.Y., who also happens to be the chairwoman of the House Financial Institutions and Consumer Credit subcommittee -- and someone I bumped into at Lifetime TV a while back where we chatted about the state of Social Security.

It's about time for the protections this bill would bring. Other bills have been offered up in this area only to get bogged down somewhere along the way. New Jersey Democratic Sen. Robert Menendez introduced two bills in April, 2006. Guess what -- they're still in committee.

And Sen. Carl Levin, D-Mich., spearheaded a congressional hearing on the subject, with no specific outcome to date, although apparently in response some big card issuers voluntarily stopped raising rates based on FICO scores alone.

If you care about the games credit card companies play then read on to find out what's coming up and what you can do.

When you see the protections you'll agree that "it's about time." You'll probably also agree it's worth 15 minutes of your time to contact your representatives to make them aware of your support.

The new bill of rights

The Maloney bill has several important provisions:

• Protection from arbitrary rate increases. No more "any time, any reason" repricing, like a FICO score change. And no more "universal default," where your interest rate or terms can change based on some kind of credit event elsewhere, not with the card in question.
• Protection from billing-cycle games. I'll bet you've opened some credit-card statements to find the payment is due almost immediately. Why? It took them nine or 10 days to mail you the bill. No more -- this bill requires credit-card companies to mail billing statements 25 days before the due date (currently the minimum is 14). And no more "double-cycle" billing, where interest may be charged even on a portion of a debt paid in time if part of the balance is left unpaid. Finally, any payment received before 5 p.m. Eastern on a due date counts, especially important for those of us making phone or online payments.
• Improved notification and disclosure. Requires 45-day advance notification of any interest-rate increase and allows cardholders to pay off an existing balance at the existing rate. And terms like "fixed rate" and "prime rate" are clarified.
• Protection from arbitrary or misleading fees. If a bill is paid on time but carried an interest charge, late fees cannot be charged for the interest due. So-called "over the limit" fees are reigned in too. Such fees, currently unlimited, could only be charged in three consecutive periods. And consumers can choose a "fixed limit" option so that purchases over that limit are denied, not accepted with a large fee.

Notably, the bill does not set a cap on interest rates nor other basic mechanics of the credit-card product. Really, it is an attempt to get card issuers to play fair and to bring full disclosure to rules in force.

Banks and credit-card issuers will undoubtedly resist. But the Democratic Congress, lame duck President and the daily exposure of financial-services-industry imperfections mean it's time, now more than ever, for such legislation.

So I know my "15 minute" articles mostly cover something you can do or learn in 15 minutes to improve your finances or financial lifestyle. This one's a bit different. It will take 15 minutes of your time -- and the results won't come for a while. That's the nature of politics, and I can't change that.

But I think it's 15 minutes well spent.

Peter Sander contributed to this article