NAACP?Supported Legislation to Stop Predatory Lending Abuses by The Credit Card Industry Signed Into Law
HOUSE APPROVES OF SENATE VERSION BY OVERWHELMING BIPARTISAN VOTE; PRESIDENT SIGNS BILL INTO LAW TODAY
Earlier today, Friday, May 22, 2009, President Obama signed the NAACP-supported Credit Cardholders’ Bill of Rights of 2009 into law. This was just two days after the House of Representatives cleared the final hurdle and agreed to the Senate changes, which included an earlier implementation of the law, by a strong bi-partisan vote of 361 - 64. The Senate had passed the bill by an overwhelming bipartisan margin of 90 - 5 on May 19; the House had passed its original version, by a vote of 357 - 70 on April 30, 2009. This important legislation includes restrictions on credit card companies’ ability to hike interest rates, often done without the knowledge of the credit cardholder, and to charge fees. Prior to signing the bill into law, President Obama said that “While Americans have a responsibility to live within their means and pay what they owe, credit card companies have a responsibility to set rules that are fair and transparent.”
Equal access to fair credit is a vital step in helping racial and ethnic minority families move out of poverty, and into the middle class and to greater financial security. Rising delinquencies in the home, auto, and credit card markets are putting a strain on working families across the country. Racial and ethnic minority families, who are routine targets for unfair and abusive lending practices, are especially hard-hit. Much like the targeting and discrimination that occurs with home loans, our communities are steered toward credit cards with the highest fees and interest rates and most complicated payment terms. In fact, one report showed that 15% of African-Americans and 13% of Latino card users have cards with interest rates over 20%, compared to only 7% of White card users – many of whom are responding to credit card solicitations with preset terms and conditions. Other research has shown that most households rely on their credit cards to cover their family budget in times of financial emergencies, such as family car repairs or medical expenses. Instead of providing relief or a financial bridge, credit cards with abusive features and practices often create vicious cycles of debt.
While many credit card companies play fairly, not all do. The Credit Cardholders’ Bill of Rights is an important tool in our efforts to provide an equal playing field to racial and ethnic minorities in their efforts to move out of poverty and into the middle class.