Monday, November 21, 2005

Consumer Bill of Rights for Credit Cards

We hold this truth to be self-evident - consumers have the right to fairness in lending. To secure this right, since biblical times, society has attempted to balance the unequal relationship between people who have money and people who need it. To guarantee a fair balance of power between borrowers and lenders, we establish this consumer bill of rights for credit cards.

1) Credit card companies may not unilaterally change the price, terms and conditions during the credit card agreement period. Revised pricing is prohibited and consumers are protected from rate increases on existing balances for any reason.

2) Accounting should be straightforward and fair to the consumer.

3) Credit card underwriting must consider the borrower’s ability to repay.

4) Binding arbitration is a violation of consumers’ rights to due process and is prohibited.

5) Fees must relate to the cost of providing credit services.

6) Interest rates may be priced according to risk, but must be conscionable.

7) Billing procedures must be fair with the benefit of doubt given to the consumer, i.e., accept the postmarked date as proof of on-time payments with no arbitrary cutoff time on the due date. The billing cycle must be consistent and preferably 30 days.

8) Minimum balance payments must be sufficient to reduce the principle and an explanation should be provided of how long and at what cost repayment of the existing balance will take if no further charges are made.

9) If the company approves charges above the credit limit, then an over limit penalty may not be charged without first granting the borrower an opportunity to lower the balance.

10) Consumers have a right to clear, simple and understandable explanation on the full cost, terms and conditions for credit cards.

No comments: