NEW YORK (AP) — Swiping your credit card would come with dramatic new protections under regulations lawmakers considered Thursday.
Among the industry practices blasted during the Senate Banking Committee hearing was the piling on of hidden fees on consumers.
“The list of questionable actions credit card companies are engaged in is lengthy and disturbing,” said Sen. Chris Dodd, D-Conn., chair of the banking committee.
Any new regulations would be in addition to a sweeping clampdown on the industry the Federal Reserve adopted late last year. Those rules, which take effect in July 2010, shield consumers from arbitrary interest rate increases and inadequate time to pay bills.
In addition, consumers will have to be given 45 days notice before any changes are made to the terms of an account. Under current rules, companies in most cases give 15 days notice before making certain changes.
A payment also could not be deemed late unless the borrower is given a reasonable period of time, such as 21 days, to pay.
Legislation introduced Wednesday by Dodd and Sen. Carl Levin, D-Mich. also would:
— Prohibit credit card companies from charging interest on penalty fees.
— Prohibit charging consumers to pay bills via mail or telephone.
— Require card issuers to lower penalty interest rates if no further violations occur after six months.
— Require issuers soliciting anyone under age 21 to get the signature of the parent or guardian who will co-sign for debt.
But given the reforms adopted in December, some at the hearing Thursday urged caution in imposing additional regulations. “We need to be careful not to take action that would limit credit,” said Sen. Richard Shelby, R-Ala.