[House Report 110-857]
[From the U.S. Government Publishing Office]



110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     110-857

======================================================================



 
             CREDIT CARDHOLDERS' BILL OF RIGHTS ACT OF 2008

                                _______
                                

 September 16, 2008.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 5244]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 5244) to amend the Truth in Lending Act to establish 
fair and transparent practices relating to the extension of 
credit under an open end consumer credit plan, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     8
Background and Need for Legislation..............................     8
Hearings.........................................................    10
Committee Consideration..........................................    11
Committee Votes..................................................    11
Committee Oversight Findings.....................................    16
Performance Goals and Objectives.................................    16
New Budget Authority, Entitlement Authority, and Tax Expenditures    16
Committee Cost Estimate..........................................    16
Congressional Budget Office Estimate.............................    17
Federal Mandates Statement.......................................    20
Advisory Committee Statement.....................................    20
Constitutional Authority Statement...............................    20
Applicability to Legislative Branch..............................    20
Earmark Identification...........................................    21
Section-by-Section Analysis of the Legislation...................    21
Changes in Existing Law Made by the Bill, as Reported............    23
Dissenting Views.................................................    32

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Credit Cardholders' Bill of Rights Act 
of 2008''.

SEC. 2. CREDIT CARDS ON TERMS CONSUMERS CAN REPAY.

  (a) Retroactive Rate Increases and Universal Default Limited.--
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is 
amended by inserting after section 127A the following new section:

``Sec. 127B. Additional requirements for credit card accounts under an 
                    open end consumer credit plan

  ``(a) Retroactive Rate Increases and Universal Default Limited.--
          ``(1) In general.--Except as provided in subsection (b), no 
        creditor may increase any annual percentage rate of interest 
        applicable to the existing balance on a credit card account of 
        the consumer under an open end consumer credit plan.
          ``(2) Existing balance defined.--For purposes of this 
        subsection and subsections (b) and (c), the term `existing 
        balance' means the amount owed on a consumer credit card 
        account as of the end of the fourteenth day after the creditor 
        provides notice of an increase in the annual percentage rate in 
        accordance with subsection (c).
          ``(3) Treatment of existing balances following rate 
        increase.--If a creditor increases any annual percentage rate 
        of interest applicable to credit card account of a consumer 
        under an open end consumer credit plan and there is an existing 
        balance in the account to which such increase may not apply, 
        the creditor shall allow the consumer to repay the existing 
        balance using a method provided by the creditor which is at 
        least as beneficial to the consumer as 1 of the following 
        methods:
                  ``(A) An amortization period for the existing balance 
                of at least 5 years starting from the date on which the 
                increased annual percentage rate went into effect.
                  ``(B) The percentage of the existing balance that was 
                included in the required minimum periodic payment 
                before the rate increase cannot be more than doubled.
          ``(4) Limitation on certain fees.--If--
                  ``(A) a creditor increases any annual percentage rate 
                of interest applicable on a credit card account of the 
                consumer under an open end consumer credit plan; and
                  ``(B) the creditor is prohibited by this section from 
                applying the increased rate to an existing balance,
        the creditor may not assess any fee or charge based solely on 
        the existing balance.''.
  (b) Exceptions to the Amendment Made by Subsection (a).--Section 127B 
of the Truth in Lending Act is amended by inserting after subsection 
(a) (as added by subsection (a)) the following new subsection:
  ``(b) Exceptions.--
          ``(1) In general.--A creditor may increase any annual 
        percentage rate of interest applicable to the existing balance 
        on a credit card account of the consumer under an open end 
        consumer credit plan only under the following circumstances:
                  ``(A) Change in index.--The increase is due solely to 
                the operation of an index that is not under the 
                creditor's control and is available to the general 
                public.
                  ``(B) Expiration or loss of promotional rate.--The 
                increase is due solely to--
                          ``(i) the expiration of a promotional rate; 
                        or
                          ``(ii) the loss of a promotional rate for a 
                        reason specified in the account agreement 
                        (e.g., late payment).
                  ``(C) Payment not received during 30-day grace period 
                after due date.--The increase is due solely to the fact 
                that the consumer's minimum payment has not been 
                received within 30 days after the due date for such 
                minimum payment.
          ``(2) Limitation on increases due to loss of promotional 
        rate.--Notwithstanding paragraph (1)(B)(ii), the annual 
        percentage rate in effect after the increase permitted under 
        such subsection due to the loss of a promotional rate may not 
        exceed the annual percentage rate that would have applied under 
        the terms of the agreement after the expiration of the 
        promotional rate.''.
  (c) Advance Notice of Rate Increases.--Section 127B of the Truth in 
Lending Act is amended by inserting after subsection (b) (as added by 
subsection (b)) the following new subsection:
  ``(c) Advance Notice of Rate Increases.--In the case of any credit 
card account under an open end consumer credit plan, no increase in any 
annual percentage rate of interest may take effect unless the creditor 
provides a written notice to the consumer at least 45 days before the 
increase takes effect which fully describes the changes in the annual 
percentage rate, in a complete and conspicuous manner, and the extent 
to which such increase would apply to an existing balance.''.
  (d) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting 
after the item relating to section 127A the following new item:

``127B. Additional requirements for credit card accounts under an open 
end consumer credit plan.''.

SEC. 3. ADDITIONAL PROVISIONS REGARDING ACCOUNT FEATURES, TERMS, AND 
                    PRICING.

  (a) Double Cycle Billing Prohibited.--Section 127B of the Truth in 
Lending Act is amended by inserting after subsection (c) (as added by 
section 2(c)) the following new subsection:
  ``(d) Double Cycle Billing.--
          ``(1) In general.--No finance charge may be imposed by a 
        creditor with respect to any balance on a credit card account 
        under an open end consumer credit plan that is based on 
        balances for days in billing cycles preceding the most recent 
        billing cycle.
          ``(2) Exceptions.--Paragraph (1) shall not apply so as to 
        prohibit a creditor from--
                  ``(A) charging a consumer for deferred interest even 
                though that interest may have accrued over multiple 
                billing cycles; or
                  ``(B) adjusting finance charges following resolution 
                of a billing error dispute.''.
  (b) Limitations Relating to Account Balances Attributable Only to 
Accrued Interest.--Section 127B is amended by inserting after 
subsection (d) (as added by subsection (a)) the following new 
subsection:
  ``(e) Limitations Relating to Account Balances Attributable Only to 
Accrued Interest.--
          ``(1) In general.--If the outstanding balance on a credit 
        card account under an open end consumer credit plan at the end 
        of a billing period represents an amount attributable only to 
        interest accrued during the preceding billing period on an 
        outstanding balance that was fully repaid during the preceding 
        billing period--
                  ``(A) no fee may be imposed or collected in 
                connection with such balance attributable only to 
                interest before such end of the billing period; and
                  ``(B) any failure to make timely repayments of the 
                balance attributable only to interest before such end 
                of the billing period shall not constitute a default on 
                the account.
        Such balance remains a legally binding debt obligation.
          ``(2) Rule of construction.--Paragraph (1) shall not be 
        construed as affecting--
                  ``(A) the consumer's obligation to pay any accrued 
                interest on a credit card account under an open end 
                consumer credit plan; or
                  ``(B) the accrual of interest on the outstanding 
                balance on any such account in accordance with the 
                terms of the account and this title.''.
  (c) Access to Payoff Balance Information.--Section 127B of the Truth 
in Lending Act is amended by inserting after subsection (e) (as added 
by subsection (b)) the following new subsection:
  ``(f) Payoff Balance Information.--Each periodic statement provided 
by a creditor to a consumer with respect to a credit card account under 
an open end consumer credit plan shall contain the telephone number, 
Internet address, and Worldwide Web site at which the consumer may 
request the payoff balance on the account.''.
  (d) Consumer Right To Reject Card Before Notice Is Provided of Open 
Account.--Section 127B of the Truth in Lending Act is amended by 
inserting after subsection (g) (as added by subsection (c)) the 
following new subsection:
  ``(g) Consumer Right to Reject Card Before Notice of New Account Is 
Provided to Consumer Reporting Agency.--
          ``(1) In general.--A creditor may not furnish any information 
        to a consumer reporting agency (as defined in section 603) 
        concerning the establishment of a newly opened credit card 
        account under an open end consumer credit plan until the credit 
        card has been used or activated by the consumer.
          ``(2) Rule of construction.--Paragraph (1) shall not be 
        construed as prohibiting a creditor from furnishing information 
        about any application for credit card account under an open end 
        consumer credit plan or any inquiry about any such account to a 
        consumer reporting agency (as so defined).''.
  (e) Use of Terms Clarified.--Section 127B of the Truth in Lending Act 
is amended by inserting after subsection (g) (as added by subsection 
(d)) the following new subsection:
  ``(h) Use of Terms.--The following requirements shall apply with 
respect to the terms of any credit card account under any open end 
consumer credit plan:
          ``(1) `Fixed' rate.--The term `fixed', when appearing in 
        conjunction with a reference to the annual percentage rate or 
        interest rate applicable with respect to such account, may only 
        be used to refer to an annual percentage rate or interest rate 
        that will not change or vary for any reason over the period 
        clearly and conspicuously specified in the terms of the 
        account.
          ``(2) Prime rate.--The term `prime rate', when appearing in 
        any agreement or contract for any such account, may only be 
        used to refer to the bank prime rate published in the Federal 
        Reserve Statistical Release on selected interest rates (daily 
        or weekly), and commonly referred to as the H.15 release (or 
        any successor publication).
          ``(3) Due date.--
                  ``(A) In general.--Each periodic statement for any 
                such account shall contain a date by which the next 
                periodic payment on the account must be made to avoid a 
                late fee or be considered a late payment, and any 
                payment received by 5 P.M., local time at the location 
                specified by the creditor for the receipt of payment, 
                on such date shall be treated as a timely payment for 
                all purposes.
                  ``(B) Certain electronic fund transfers.--Any payment 
                with respect to any such account made by a consumer on-
                line to the Web site of the credit card issuer or by 
                telephone directly to the credit card issuer before 5 
                P.M., local time at the location specified by the 
                creditor for the receipt of payment, on any business 
                day shall be credited to the consumer's account that 
                business day.
                  ``(C) Presumption of timely payment.--Any evidence 
                provided by a consumer in the form of a receipt from 
                the United States Postal Service or other common 
                carrier indicating that a payment on a credit card 
                account was sent to the issuer not less than 7 days 
                before the due date contained in the periodic statement 
                under subparagraph (A) for such payment shall create a 
                presumption that such payment was made by the due date, 
                which may be rebutted by the creditor for fraud or 
                dishonesty on the part of the consumer with respect to 
                the mailing date.''.
  (f) Pro Rata Payment Allocations.--Section 127B of the Truth in 
Lending Act is amended by inserting after subsection (h) (as added by 
subsection (e)) the following new subsection:
  ``(i) Pro Rata Payment Allocations.--
          ``(1) In general.--Except as permitted under paragraph (2), 
        if the outstanding balance on a credit card account under an 
        open end consumer credit plan accrues interest at 2 or more 
        different annual percentage rates, the total amount of each 
        periodic payment made on such account shall be allocated by the 
        creditor between or among the outstanding balances at each such 
        annual percentage rate in the same proportion as each such 
        balance bears to the total outstanding balance on the account.
          ``(2) Allocation to higher rate.--Notwithstanding paragraph 
        (1), a creditor may elect, in any case described in such 
        paragraph, to allocate more than a pro rata share of any 
        payment to a portion of the outstanding balance that bears a 
        higher annual percentage rate than another portion of such 
        outstanding balance.
          ``(3) Special rules for accounts with promotional rate 
        balances or deferred interest balances.--
                  ``(A) In general.--Notwithstanding paragraph (1) or 
                (2), in the case of a credit card account under an open 
                end consumer credit plan the current terms of which 
                allow the consumer to receive the benefit of a 
                promotional rate or deferred interest plan, amounts 
                paid in excess of the required minimum payment shall be 
                allocated to the promotional rate balance or the 
                deferred interest balance only if other balances have 
                been fully paid.
                  ``(B) Exception for deferred interest balances.--
                Notwithstanding subparagraph (A), a creditor may 
                allocate the entire amount paid by the consumer in 
                excess of the required minimum periodic payment to a 
                balance on which interest is deferred during the 2 
                billing cycles immediately preceding the expiration of 
                the period during which interest is deferred.
          ``(4) Prohibition on restricted grace periods under certain 
        circumstances.--If, with respect to any credit card account 
        under an open end consumer credit, a creditor offers a time 
        period in which to repay credit extended without incurring 
        finance charges to cardholders who pay the balance in full, the 
        creditor may not deny a consumer who takes advantage of a 
        promotional rate balance or deferred interest rate balance 
        offer with respect to such an account any such time period for 
        repaying credit without incurring finance charges.''.
  (g) Timely Provision of Periodic Statements.--Section 127B of the 
Truth in Lending Act is amended by inserting after subsection (i) (as 
added by subsection (f)) the following new subsection:
  ``(j) Timely Provision of Periodic Statements.--Each periodic 
statement with respect to a credit card account under an open end 
consumer credit plan shall be sent by the creditor to the consumer not 
less than 25 calendar days before the due date identified in such 
statement for the next payment on the outstanding balance on such 
account, and section 163(a) shall be applied with respect to any such 
account by substituting `25' for `fourteen'.''.

SEC. 4. CONSUMER CHOICE WITH RESPECT TO OVER-THE-LIMIT TRANSACTIONS.

  Section 127B of the Truth in Lending Act is amended by inserting 
after subsection (j) (as added by section 3(g)) the following new 
subsections:
  ``(k) Opt-Out of Creditor Authorization of Over-the-Limit 
Transactions if Fees Are Imposed.--
          ``(1) In general.--In the case of any credit card account 
        under an open end consumer credit plan under which an over-the-
        limit-fee may be imposed by the creditor for any extension of 
        credit in excess of the amount of credit authorized to be 
        extended under such account, the consumer may elect to prohibit 
        the creditor, with respect to such account, from completing any 
        transaction involving the extension of credit, with respect to 
        such account, in excess of the amount of credit authorized by 
        notifying the creditor of such election in accordance with 
        paragraph (2).
          ``(2) Notification by consumer.--A consumer shall notify a 
        creditor under paragraph (1)--
                  ``(A) through the notification system maintained by 
                the creditor under paragraph (4); or
                  ``(B) by submitting to the creditor a signed notice 
                of election, by mail or electronic communication, on a 
                form issued by the creditor for purposes of this 
                subparagraph.
          ``(3) Effectiveness of election.--An election by a consumer 
        under paragraph (1) shall be effective beginning 3 business 
        days after the creditor receives notice from the consumer in 
        accordance with paragraph (2) and shall remain effective until 
        the consumer revokes the election.
          ``(4) Notification system.--Each creditor that maintains 
        credit card accounts under an open end consumer credit plan 
        shall establish and maintain a notification system, including a 
        toll-free telephone number, Internet address, and Worldwide Web 
        site, which permits any consumer whose credit card account is 
        maintained by the creditor to notify the creditor of an 
        election under this subsection in accordance with paragraph 
        (2).
          ``(5) Annual notice to consumers of availability of 
        election.--In the case of any credit card account under an open 
        end consumer credit plan, the creditor shall include a notice, 
        in clear and conspicuous language, of the availability of an 
        election by the consumer under this paragraph as a means of 
        avoiding over-the limit fees and a higher amount of 
        indebtedness, and the method for providing such notice--
                  ``(A) in the periodic statement required under 
                subsection (b) with respect to such account at least 
                once each calendar year; and
                  ``(B) in any such periodic statement which includes a 
                notice of the imposition of an over-the-limit fee 
                during the period covered by the statement.
          ``(6) No fees if consumer has made an election.--If a 
        consumer has made an election under paragraph (1), no over-the-
        limit fee may be imposed on the account for any reason that has 
        caused the outstanding balance in the account to exceed the 
        credit limit.
          ``(7) Regulations.--
                  ``(A) In general.--The Board shall issue regulations 
                allowing for the completion of over-the-limit 
                transactions that for operational reasons exceed the 
                credit limit by a de minimis amount, even where the 
                cardholder has made an election under paragraph (1).
                  ``(B) Subject to no fee limitation.--The regulations 
                prescribed under subparagraph (A) shall not allow for 
                the imposition of any fee or any rate increase based on 
                the permitted over-the-limit transactions.
  ``(l) Over-the-Limit Fee Restrictions.--With respect to a credit card 
account under an open end consumer credit plan, an over-the-limit fee 
may be imposed only once during a billing cycle if, on the last day of 
such billing cycle, the credit limit on the account is exceeded, and an 
over-the-limit fee, with respect to such excess credit, may be imposed 
only once in each of the 2 subsequent billing cycles, unless the 
consumer has obtained an additional extension of credit in excess of 
such credit limit during any such subsequent cycle or the consumer 
reduces the outstanding balance below the credit limit as of the end of 
such billing cycle.
  ``(m) Over-the-Limit Fees Prohibited in Conjunction With Certain 
Credit Holds.--Notwithstanding subsection (l), an over-the-limit fee 
may not be imposed if the credit limit was exceeded due to a hold 
unless the actual amount of the transaction for which the hold was 
placed would have resulted in the consumer exceeding the credit 
limit.''.

SEC. 5. STRENGTHEN CREDIT CARD INFORMATION COLLECTION.

  Section 136(b) of the Truth in Lending Act (15 U.S.C. 1646(b)) is 
amended--
          (1) in paragraph (1)--
                  (A) by striking ``Collection required.--The Board 
                shall'' and inserting ``Collection required.--
                  ``(A) In general.--The Board shall''.
                  (B) by adding at the end the following new 
                subparagraph:
                  ``(B) Information to be included.--The information 
                under subparagraph (A) shall include, for the relevant 
                semiannual period, the following information with 
                respect each creditor in connection with any consumer 
                credit card account:
                          ``(i) A list of each type of transaction or 
                        event during the semiannual period for which 1 
                        or more creditors has imposed a separate 
                        interest rate upon a consumer credit card 
                        accountholder, including purchases, cash 
                        advances, and balance transfers.
                          ``(ii) For each type of transaction or event 
                        identified under clause (i)--
                                  ``(I) each distinct interest rate 
                                charged by the card issuer to a 
                                consumer credit card accountholder 
                                during the semiannual period ; and
                                  ``(II) the number of cardholders to 
                                whom each such interest rate was 
                                applied during the last calendar month 
                                of the semiannual period, and the total 
                                amount of interest charged to such 
                                accountholders at each such rate during 
                                such month.
                          ``(iii) A list of each type of fee that 1 or 
                        more of the creditors has imposed upon a 
                        consumer credit card accountholder during the 
                        semiannual period, including any fee imposed 
                        for obtaining a cash advance, making a late 
                        payment, exceeding the credit limit on an 
                        account, making a balance transfer, or 
                        exchanging United States dollars for foreign 
                        currency.
                          ``(iv) For each type of fee identified under 
                        clause (iii), the number of accountholders upon 
                        whom the fee was imposed during each calendar 
                        month of the semiannual period, and the total 
                        amount of fees imposed upon cardholders during 
                        such month.
                          ``(v) The total number of consumer credit 
                        card accountholders that incurred any finance 
                        charge or any other fee during the semiannual 
                        period.
                          ``(vi) The total number of consumer credit 
                        card accounts maintained by each creditor as of 
                        the end of the semiannual period.
                          ``(vii) The total number and value of cash 
                        advances made during the semiannual period 
                        under a consumer credit card account.
                          ``(viii) The total number and value of 
                        purchases involving or constituting consumer 
                        credit card transactions during the semiannual 
                        period.
                          ``(ix) The total number and amount of 
                        repayments on outstanding balances on consumer 
                        credit card accounts in each month of the 
                        semiannual period.
                          ``(x) The percentage of all consumer credit 
                        card accountholders (with respect to any 
                        creditor) who--
                                  ``(I) incurred a finance charge in 
                                each month of the semiannual period on 
                                any portion of an outstanding balance 
                                on which a finance charge had not 
                                previously been incurred; and
                                  ``(II) incurred any such finance 
                                charge at any time during the 
                                semiannual period.
                          ``(xi) The total number and amount of 
                        balances accruing finance charges during the 
                        semiannual period.
                          ``(xii) The total number and amount of the 
                        outstanding balances on consumer credit card 
                        accounts as of the end of such semiannual 
                        period.
                          ``(xiii) Total credit limits in effect on 
                        consumer credit card accounts as of the end of 
                        such semiannual period and the amount by which 
                        such credit limits exceed the credit limits in 
                        effect as of the beginning of such period.
                          ``(xiv) Any other information related to 
                        interest rates, fees, or other charges that the 
                        Board deems of interest.''; and
          (2) by adding at the end the following new paragraph:
          ``(5) Report to congress.--The Board shall, on an annual 
        basis, transmit to Congress and make public a report containing 
        estimates by the Board of the approximate, relative percentage 
        of income derived by the credit card operations of depository 
        institutions from--
                  ``(A) the imposition of interest rates on 
                cardholders, including separate estimates for--
                          ``(i) interest with an annual percentage rate 
                        of less than 25 percent; and
                          ``(ii) interest with an annual percentage 
                        rate equal to or greater than 25 percent;
                  ``(B) the imposition of fees on cardholders;
                  ``(C) the imposition of fees on merchants; and
                  ``(D) any other material source of income, while 
                specifying the nature of that income.''.

SEC. 6. STANDARDS APPLICABLE TO INITIAL ISSUANCE OF SUBPRIME OR ``FEE 
                    HARVESTER'' CARDS.

  Section 127B of the Truth in Lending Act is amended by inserting 
after subsection (m) (as added by section 4) the following new 
subsection:
  ``(n) Standards Applicable to Initial Issuance of Subprime or `Fee 
Harvester' Cards.--
          ``(1) In general.--In the case of any credit card account 
        under an open end consumer credit plan the terms of which 
        require the payment of fees (other than late fees or over-the-
        limit fees) by the consumer in the first year the account is 
        opened in an amount in excess of 25 percent of the total amount 
        of credit authorized under the account, no payment of any fees 
        (other than late fees or over-the-limit fees) may be made from 
        the credit made available by the card.
          ``(2) Rule of construction.--No provision of this subsection 
        may be construed as authorizing any imposition or payment of 
        advance fees otherwise prohibited by any provision of law.''.

SEC. 7. EXTENSIONS OF CREDIT TO UNDERAGE CONSUMERS.

  Section 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) is 
amended by adding at the end the following new paragraph:
          ``(8) Extensions of credit to underage consumers.--
                  ``(A) In general.--No credit card may be knowingly 
                issued to, or open end credit plan established on 
                behalf of, a consumer who has not attained the age of 
                18, unless the consumer is emancipated under applicable 
                State law.
                  ``(B) Rule of construction.--For the purposes of 
                determining the age of an applicant, the submission of 
                a signed application by a consumer stating that the 
                consumer is over 18 shall be considered sufficient 
                proof of age.''.

SEC. 8. EFFECTIVE DATE.

  (a) In General.--The amendments made by this Act shall apply to all 
credit card accounts under open end consumer credit plans as of the end 
of the 1-year period beginning on the date of the enactment of this 
Act.
  (b) Regulations.--The Board of Governors of the Federal Reserve 
System, in consultation with the Comptroller of the Currency, the 
Director of the Office of Thrift Supervision, the Federal Deposit 
Insurance Corporation, the National Credit Union Administration Board, 
and the Federal Trade Commission, shall prescribe regulations, in final 
form, implementing the amendments made by this Act before the end of 
the 6-month period beginning on the date of the enactment of this Act, 
except that it is the sense of the Congress that no provision of this 
Act should impede the promulgation of regulations in final form under 
laws in effect on the day before such date of enactment and that such 
regulations should be prescribed in final form on or before December 
31, 2008, and should apply to credit card transactions under any open 
end consumer credit plan after the end of the 30-day period beginning 
on the date such regulations are prescribed in final form.

                          Purpose and Summary

    H.R. 5244, the ``Credit Cardholders' Bill of Rights Act of 
2008'', prohibits certain unfair and deceptive credit card 
practices and provides consumers with tools to manage their 
credit card debt responsibly. The bill prohibits retroactive 
rate increases on existing balances except under limited 
circumstances, including where the consumer is over 30 days 
late in making payment, and requires creditors to provide 
consumers with a reasonable time to pay off the balance. It 
requires creditors to provide a written notice of any rate 
increase at least 45 days before the increase takes effect, and 
to send periodic statements to consumers no less than 25 days 
before the due date. The bill prohibits double cycle billing 
and requires creditors to allocate payments among balances so 
as to allow consumers to take full advantage of promotional 
rates and to make payments towards balances with higher rates. 
The bill limits overlimit fees and bans fees on interest-only 
balances. It prohibits creditors from knowingly issuing a 
credit card to a minor who is not emancipated. For credit cards 
on which fees in the first year exceed 25 percent of the credit 
limit, the bill prohibits such fees from being paid from the 
credit available under the card account agreement (except late 
or overlimit fees). The bill also provides for additional data 
collection to enable better oversight and regulation.

                  Background and Need for Legislation

    It is estimated that 145 million Americans (approximately 
half of the population) own credit cards. According to 
Cardweb.com, the average household carries more than $8,000 in 
credit card debt (other estimates range from $2,200 to more 
than $9,000). The accumulation of large amounts of credit card 
debt can have profound implications on individual consumers and 
the economy more generally. Personal bankruptcies, which some 
analysts attribute in part to high consumer debt levels, jumped 
40 percent in 2007, and the personal savings rate in the U.S. 
has hovered at or below 1 percent of disposable income for 
several years, down from 7 to 8 percent in the 1980s and early 
1990s.
    Credit card pricing and billing practices developed over 
the last twenty years appear to contribute to the large debt 
loads facing many consumers. Prior to 1990, credit cards were 
generally offered only to persons with high credit standing, 
carried standardized interest rates of around 20 percent, and 
charged few fees. In the early 1990s, credit card issuers began 
to adopt ``risk-based'' pricing, which was intended to employ a 
variety of factors to insure that cardholders were charged 
rates that reflected the default and other risks they pose to 
creditors. In addition, credit card issuers began to charge 
increased penalty fees for, among other things, late payment 
and over-the-limit transactions. Card issuers contend that the 
new pricing models enable them to offer cards to more 
individuals and charge lower interest rates to better credit 
risks. In contrast, consumer advocates allege that weakened 
underwriting standards are not necessarily in the best interest 
of cardholders, and that many cards have ``teaser'' rates which 
are unrealistically low and soon increase to a much higher 
maximum rate. A 2005 report by the Government Accountability 
Office and a 2006 report by the Board of Governors of the 
Federal Reserve both concluded that there was no empirical 
support for the proposition that ``risk- based'' pricing had 
led to lower rates. In addition, consumer advocates contend 
that some fees and penalty pricing are disproportionate to the 
risk posed by the consumer and are mainly intended to increase 
fee income. According to Cardweb.com, the average late fee rose 
to $35 in 2007, up from less than $13 in 1994. Similarly, 
average fees charged for exceeding a credit limit more than 
doubled to $26 a month from $11.
    Retroactive Rate Increases on Pre-existing Balances. One of 
the most controversial common practices is the retroactive 
application of increased interest rates to consumers' pre-
existing balances. According to a 2008 survey by Consumer 
Action, most card issuers (77 percent) reserve the right to 
increase a consumer's interest rate on outstanding and 
prospective balances under ``any time, any reason'' clauses. 
Issuers contend that these clauses are necessary to insure they 
are able to price for risk. In contrast, consumer advocates 
argue that retroactive application is unfair and unjustified. 
Moreover, these advocates dispute whether this practice is 
truly risk-based given that individuals can be re-priced 
through no fault of their own. For instance, many consumers who 
are in good standing with their particular card issuer 
nonetheless can see their interest rates increase if there is a 
change in market conditions. Even when the consumer poses an 
additional risk (i.e. frequent late payments), consumer 
advocates assert that accounts should only be ``re-priced'' 
prospectively. Some economists argue that retroactive re-
pricing on existing balances has an anticompetitive effect on 
the market since consumers can't select cards on this basis or 
avoid the increases.
    A number of other practices can have negative impacts on 
consumers, including, but not limited to:
    Double-Cycle Billing. Under this practice, issuers charge 
consumers interest on the portion of balances repaid during a 
grace period, when the consumer pays some but not all of the 
outstanding balances. This is viewed as unfair because 
consumers are paying interest on portions of debt already 
repaid.
    Payment Allocation. When a consumer's account consists of 
balances with two or more interest rates, typically all of the 
payments made to the account are applied first to the balance 
with the lowest interest rate, allowing the higher rate balance 
to grow more rapidly. This practice is viewed as unfair because 
it does not provide consumers with the full benefit of lower 
promotional interest rates.
    Late Payment. Consumer advocates allege that many issuers 
fail to promptly credit consumer payments, arbitrarily change 
due dates, provide unreasonably short times for bill payment, 
and otherwise make timely payments by cardholders difficult. 
They argue that this practice is harmful to consumers given the 
often severe consequences for late payments (in the form of 
retroactive interest rate increases, penalty interest rates, 
finance charges, and late fees).

                        REGULATORY DEVELOPMENTS

    In May 2008, the Federal Reserve, Office of Thrift 
Supervision, and National Credit Union Administration proposed 
rules prohibiting unfair or deceptive practices regarding 
credit cards and overdraft services. The legal standard for 
declaring a practice unfair or deceptive requires that the 
practice represent a market failure that substantially 
adversely affects consumers. Among other provisions, the 
proposed rules include five key protections for consumers:
    (1) Banks would be prohibited from increasing the rate on a 
pre-existing credit card balance (except under limited 
circumstances) and must allow the consumer to pay off that 
balance over a reasonable period of time.
    (2) Banks would be prohibited from applying payments in 
excess of the minimum in a manner that maximizes interest 
charges.
    (3) Banks would be required to give consumers the full 
benefit of discounted promotional rates on credit cards by 
applying payments in excess of the minimum to any higher-rate 
balances first, and by providing a grace period for purchases 
where the consumer is otherwise eligible.
    (4) Banks would be prohibited from imposing interest 
charges using the ``two-cycle'' method, which computes interest 
on balances on days in billing cycles preceding the most recent 
billing cycle.
    (5) Banks would be required to provide consumers a 
reasonable amount of time to make payments.

                                Hearings

    The Subcommittee on Financial Institutions and Consumer 
Credit held a hearing on March 13, 2008, entitled ``The Credit 
Cardholders' Bill of Rights: Providing New Protections for 
Consumers.'' The following witnesses testified:
           Ms. Elizabeth Warren, Leo Gottlieb Professor 
        of Law, Harvard Law School
           Mr. Greg Baer, Deputy General Counsel, 
        Regulatory and Public Policy, Bank of America
           Mr. Adam J. Levitin, Associate Professor of 
        Law, Georgetown University Law Center
           Mr. John Finneran, General Counsel, Capital 
        One
           Mr. Lawrence Ausubel, Professor, Department 
        of Economics, University of Maryland
           Ms. Carter Franke, Marketing Executive, 
        JPMorgan Chase
           Mr. Oliver I. Ireland, Partner, Morrison & 
        Foerster
           Ms. Katherine M. Porter, Associate 
        Professor, The University of Iowa College of Law
    The Subcommittee on Financial Institutions and Consumer 
Credit held a hearing on April 17, 2008, entitled ``Legislative 
Hearing on H.R. 5244, The Credit Cardholders' Bill of Rights: 
Providing New Protections for Consumers''. The following 
witnesses testified:
    Panel One:
           The Honorable Carl Levin, United States 
        Senator, State of Michigan
           The Honorable Ron Wyden, United States 
        Senator, State of Oregon
    Panel Two:
           Mr. Steven Autrey, Fredericksburg, VA
           Ms. Susan Wones, Denver, CO
           Mr. Stephen M. Strachan, York, PA
    Panel Three:
           Ms. Sandra Braunstein, Director, Consumer 
        Affairs Division, Board of Governors of the Federal 
        Reserve System
           Mr. Marty Gruenberg, Deputy Director, 
        Federal Deposit Insurance Corporation
           Ms. Julie Williams, Deputy Director and 
        General Counsel, Office of the Comptroller of the 
        Currency
           Mr. John Bowman, General Counsel, Office of 
        Thrift Supervision
    Panel Four:
           Mr. John P. Carey, Chief Administrative 
        Officer and Executive Vice President, Citi Cards, 
        Citigroup Inc.
           Mr. Larry Sharnak, Executive Vice President 
        and General Manager, Consumer Cards, American Express 
        Company
           Mr. Carlos Minetti, Executive Vice 
        President, Cardmember Services and Banking, Discover 
        Financial Services
           Mr. Travis B. Plunkett, Legislative 
        Director, Consumer Federation of America
           Ms. Linda Sherry, Director, National 
        Priorities, Consumer Action
           Mr. Ed Mierzwinski, Consumer Program 
        Director, U.S. Public Interest Research Group

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 31, 2008, and ordered H.R. 5244, the ``Credit Cardholders' 
Bill of Rights Act of 2008'', as amended, favorably reported by 
a record vote of 39 yeas and 27 nays.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Frank to report the bill, as amended, to the 
House with a favorable recommendation was agreed to by a record 
vote of 39 yeas and 27 nays (Record vote no. FC-120). The names 
of Members voting for and against follow:

                                              RECORD VOTE NO.FC-120
----------------------------------------------------------------------------------------------------------------
         Representative              Aye      Nay     Present     Representative       Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank.......................        X                      Mr. Bachus.........                  X
Mr. Kanjorski...................        X                      Ms. Pryce (OH).....                  X
Ms. Waters......................        X                      Mr. Castle.........                  X
Mrs. Maloney....................        X                      Mr. King (NY)......                  X
Mr. Gutierrez...................        X                      Mr. Royce..........                  X
Ms. Velazquez...................        X                      Mr. Lucas..........                  X
Mr. Watt........................        X                      Mr. Paul...........                  X
Mr. Ackerman....................        X                      Mr. LaTourette.....
Mr. Sherman.....................        X                      Mr. Manzullo.......                  X
Mr. Meeks.......................        X                      Mr. Jones..........        X
Mr. Moore (KS)..................        X                      Mrs. Biggert.......                  X
Mr. Capuano.....................        X                      Mr. Shays..........        X
Mr. Hinojosa....................        X                      Mr. Miller (CA)....                  X
Mr. Clay........................        X                      Mrs. Capito........
Mrs. McCarthy...................        X                      Mr. Feeney.........                  X
Mr. Baca........................        X                      Mr. Hensarling.....                  X
Mr. Lynch.......................        X                      Mr. Garrett (NJ)...                  X
Mr. Miller (NC).................        X                      Ms. Brown-Waite....
Mr. Scott.......................        X                      Mr. Barrett (SC)...                  X
Mr. Green.......................        X                      Mr. Gerlach........                  X
Mr. Cleaver.....................        X                      Mr. Pearce.........                  X
Ms. Bean........................        X                      Mr. Neugebauer.....                  X
Ms. Moore (WI)..................        X                      Mr. Price (GA).....                  X
Mr. Davis (TN)..................        X                      Mr. Davis (KY).....                  X
Mr. Hodes.......................        X                      Mr. McHenry........                  X
Mr. Ellison.....................        X                      Mr. Campbell.......                  X
Mr. Klein.......................        X                      Mr. Putnam.........                  X
Mr. Mahoney (FL)................        X                      Mrs. Bachmann......                  X
Mr. Wilson......................        X                      Mr. Roskam.........
Mr. Perlmutter..................        X                      Mr. Marchant.......                  X
Mr. Murphy......................        X                      Mr. McCotter.......                  X
Mr. Donnelly....................        X                      Mr. McCarthy.......                  X
Mr. Foster......................        X                      Mr. Heller.........                  X
Mr. Carson......................        X
Ms. Speier......................        X
Mr. Cazayoux....................        X
Mr. Childers....................        X
----------------------------------------------------------------------------------------------------------------

    The following amendments were disposed of by record votes. 
The names of Members voting for and against follow:
    An amendment by Mr. Ackerman, No. 1a, prohibiting fees for 
payment of credit card accounts by electronic fund transfers, 
to the Committee Print (Maloney amendment in the nature of a 
substitute), was not agreed to, by a roll call vote of 27 ayes 
and 39 nays (Record vote no. FC-115):

                                              RECORD VOTE NO.FC-115
----------------------------------------------------------------------------------------------------------------
         Representative              Aye       Nay     Present    Representative       Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank.......................        X                       Mr. Bachus........                  X
Mr. Kanjorski...................        X                       Ms. Pryce (OH)....                  X
Ms. Waters......................        X                       Mr. Castle........                  X
Mrs. Maloney....................        X                       Mr. King (NY).....                  X
Mr. Gutierrez...................        X                       Mr. Royce.........                  X
Ms. Velazquez...................        X                       Mr. Lucas.........                  X
Mr. Watt........................        X                       Mr. Paul..........                  X
Mr. Ackerman....................        X                       Mr. LaTourette....                  X
Mr. Sherman.....................        X                       Mr. Manzullo......                  X
Mr. Meeks.......................        X                       Mr. Jones.........        X
Mr. Moore (KS)..................        X                       Mrs. Biggert......                  X
Mr. Capuano.....................        X                       Mr. Shays.........
Mr. Hinojosa....................        X                       Mr. Miller (CA)...                  X
Mr. Clay........................        X                       Mrs. Capito.......                  X
Mrs. McCarthy...................                  X             Mr. Feeney........                  X
Mr. Baca........................        X                       Mr. Hensarling....                  X
Mr. Lynch.......................        X                       Mr. Garrett (NJ)..                  X
Mr. Miller (NC).................        X                       Ms. Brown-Waite...
Mr. Scott.......................        X                       Mr. Barrett (SC)..                  X
Mr. Green.......................        X                       Mr. Gerlach.......                  X
Mr. Cleaver.....................        X                       Mr. Pearce........                  X
Ms. Bean........................                  X             Mr. Neugebauer....                  X
Ms. Moore (WI)..................                  X             Mr. Price (GA)....                  X
Mr. Davis (TN)..................                  X             Mr. Davis (KY)....                  X
Mr. Hodes.......................        X                       Mr. McHenry.......                  X
Mr. Ellison.....................        X                       Mr. Campbell......                  X
Mr. Klein.......................        X                       Mr. Putnam........                  X
Mr. Mahoney (FL)................                  X             Mrs. Bachmann.....
Mr. Wilson......................                  X             Mr. Roskam........                  X
Mr. Perlmutter..................        X                       Mr. Marchant......                  X
Mr. Murphy......................                  X             Mr. McCotter......
Mr. Donnelly....................                  X             Mr. McCarthy......                  X
Mr. Foster......................                  X             Mr. Heller........                  X
Mr. Carson......................        X
Ms. Speier......................        X
Mr. Cazayoux....................                  X
Mr. Childers....................                  X
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Hensarling, No. 1c, regarding predatory 
borrowing, to the Committee Print, was not agreed to by a 
record vote of 30 yeas and 37 nays (Record vote no. FC-116):

                                             RECORD VOTE NO. FC-116
----------------------------------------------------------------------------------------------------------------
          Representative             Aye       Nay     Present     Representative       Aye      Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank........................                 X             Mr. Bachus.........        X
Mr. Kanjorski....................                 X             Ms. Pryce (OH).....        X
Ms. Waters.......................                 X             Mr. Castle.........        X
Mrs. Maloney.....................                 X             Mr. King (NY)......        X
Mr. Gutierrez....................                 X             Mr. Royce..........        X
Ms. Velazquez....................                 X             Mr. Lucas..........        X
Mr. Watt.........................                 X             Mr. Paul...........        X
Mr. Ackerman.....................                 X             Mr. LaTourette.....
Mr. Sherman......................                 X             Mr. Manzullo.......        X
Mr. Meeks........................                 X             Mr. Jones..........        X
Mr. Moore (KS)...................                 X             Mrs. Biggert.......        X
Mr. Capuano......................                 X             Mr. Shays..........        X
Mr. Hinojosa.....................                 X             Mr. Miller (CA)....        X
Mr. Clay.........................                 X             Mrs. Capito........        X
Mrs. McCarthy....................                 X             Mr. Feeney.........
Mr. Baca.........................                 X             Mr. Hensarling.....        X
Mr. Lynch........................                 X             Mr. Garrett (NJ)...        X
Mr. Miller (NC)..................                 X             Ms. Brown-Waite....
Mr. Scott........................                 X             Mr. Barrett (SC)...        X
Mr. Green........................                 X             Mr. Gerlach........        X
Mr. Cleaver......................                 X             Mr. Pearce.........        X
Ms. Bean.........................                 X             Mr. Neugebauer.....        X
Ms. Moore (WI)...................                 X             Mr. Price (GA).....        X
Mr. Davis (TN)...................                 X             Mr. Davis (KY).....        X
Mr. Hodes........................                 X             Mr. McHenry........        X
Mr. Ellison......................                 X             Mr. Campbell.......        X
Mr. Klein........................                 X             Mr. Putnam.........        X
Mr. Mahoney (FL).................                 X             Mrs. Bachmann......        X
Mr. Wilson.......................                 X             Mr. Roskam.........        X
Mr. Perlmutter...................                 X             Mr. Marchant.......        X
Mr. Murphy.......................                 X             Mr. McCotter.......        X
Mr. Donnelly.....................                 X             Mr. McCarthy.......        X
Mr. Foster.......................                 X             Mr. Heller.........        X
Mr. Carson.......................                 X
Ms. Speier.......................                 X
Mr. Cazayoux.....................                 X
Mr. Childers.....................                 X
----------------------------------------------------------------------------------------------------------------

    A substitute amendment by Mr. Watt, No. 1d(2), regarding 
the effective date, for the Hodes amendment to the Committee 
Print, was agreed to by a record vote of 57 yeas, 10 nays, and 
1 pass (Record vote no. FC-117):

                                             RECORD VOTE NO. FC-117
----------------------------------------------------------------------------------------------------------------
         Representative              Aye       Nay     Present    Representative       Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank.......................        X                       Mr. Bachus........        X
Mr. Kanjorski...................        X                       Ms. Pryce (OH)....        X
Ms. Waters......................                          Pass  Mr. Castle........        X
Mrs. Maloney....................        X                       Mr. King (NY).....        X
Mr. Gutierrez...................        X                       Mr. Royce.........        X
Ms. Velazquez...................                  X             Mr. Lucas.........        X
Mr. Watt........................        X                       Mr. Paul..........        X
Mr. Ackerman....................        X                       Mr. LaTourette....
Mr. Sherman.....................        X                       Mr. Manzullo......        X
Mr. Meeks.......................        X                       Mr. Jones.........        X
Mr. Moore (KS)..................                  X             Mrs. Biggert......        X
Mr. Capuano.....................        X                       Mr. Shays.........        X
Mr. Hinojosa....................        X                       Mr. Miller (CA)...        X
Mr. Clay........................        X                       Mrs. Capito.......        X
Mrs. McCarthy...................                  X             Mr. Feeney........        X
Mr. Baca........................        X                       Mr. Hensarling....        X
Mr. Lynch.......................        X                       Mr. Garrett (NJ)..        X
Mr. Miller (NC).................        X                       Ms. Brown-Waite...
Mr. Scott.......................        X                       Mr. Barrett (SC)..        X
Mr. Green.......................        X                       Mr. Gerlach.......        X
Mr. Cleaver.....................        X                       Mr. Pearce........        X
Ms. Bean........................        X                       Mr. Neugebauer....        X
Ms. Moore (WI)..................        X                       Mr. Price (GA)....                  X
Mr. Davis (TN)..................        X                       Mr. Davis (KY)....        X
Mr. Hodes.......................                  X             Mr. McHenry.......        X
Mr. Ellison.....................        X                       Mr. Campbell......                  X
Mr. Klein.......................        X                       Mr. Putnam........        X
Mr. Mahoney (FL)................        X                       Mrs. Bachmann.....        X
Mr. Wilson......................                  X             Mr. Roskam........        X
Mr. Perlmutter..................                  X             Mr. Marchant......        X
Mr. Murphy......................        X                       Mr. McCotter......        X
Mr. Donnelly....................        X                       Mr. McCarthy......        X
Mr. Foster......................                  X             Mr. Heller........        X
Mr. Carson......................        X
Ms. Speier......................        X
Mr. Cazayoux....................        X
Mr. Childers....................                  X
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Price, No. 1i, regarding damages for 
viola- tions limited to individual actions, to the Committee 
Print, was NOT AGREED TO by a record vote of 30 yeas and 37 
nays (Record vote no. FC-118):

                                             RECORD VOTE NO. FC-118
----------------------------------------------------------------------------------------------------------------
          Representative             Aye       Nay     Present     Representative       Aye      Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank........................                 X             Mr. Bachus.........        X
Mr. Kanjorski....................                 X             Ms. Pryce (OH).....        X
Ms. Waters.......................                 X             Mr. Castle.........        X
Mrs. Maloney.....................                 X             Mr. King (NY)......        X
Mr. Gutierrez....................                 X             Mr. Royce..........        X
Ms. Velazquez....................                 X             Mr. Lucas..........        X
Mr. Watt.........................                 X             Mr. Paul...........        X
Mr. Ackerman.....................                 X             Mr. LaTourette.....
Mr. Sherman......................                 X             Mr. Manzullo.......        X
Mr. Meeks........................                 X             Mr. Jones..........        X
Mr. Moore (KS)...................                 X             Mrs. Biggert.......        X
Mr. Capuano......................                 X             Mr. Shays..........        X
Mr. Hinojosa.....................                 X             Mr. Miller (CA)....        X
Mr. Clay.........................                 X             Mrs. Capito........
Mrs. McCarthy....................                 X             Mr. Feeney.........        X
Mr. Baca.........................                 X             Mr. Hensarling.....        X
Mr. Lynch........................                 X             Mr. Garrett (NJ)...        X
Mr. Miller (NC)..................                 X             Ms. Brown-Waite....
Mr. Scott........................                 X             Mr. Barrett (SC)...        X
Mr. Green........................                 X             Mr. Gerlach........        X
Mr. Cleaver......................                 X             Mr. Pearce.........        X
Ms. Bean.........................                 X             Mr. Neugebauer.....        X
Ms. Moore (WI)...................                 X             Mr. Price (GA).....        X
Mr. Davis (TN)...................                 X             Mr. Davis (KY).....        X
Mr. Hodes........................                 X             Mr. McHenry........        X
Mr. Ellison......................                 X             Mr. Campbell.......        X
Mr. Klein........................                 X             Mr. Putnam.........        X
Mr. Mahoney (FL).................                 X             Mrs. Bachmann......        X
Mr. Wilson.......................                 X             Mr. Roskam.........        X
Mr. Perlmutter...................                 X             Mr. Marchant.......        X
Mr. Murphy.......................                 X             Mr. McCotter.......        X
Mr. Donnelly.....................                 X             Mr. McCarthy.......        X
Mr. Foster.......................                 X             Mr. Heller.........        X
Mr. Carson.......................                 X
Ms. Speier.......................                 X
Mr. Cazayoux.....................                 X
Mr. Childers.....................                 X
----------------------------------------------------------------------------------------------------------------

    A substitute amendment by Mr. Castle, No. 1h, expressing 
the sense of the Congress regarding proposed consumer 
protection regulations, for the Committee Print, was not agreed 
to by a record vote of 28 yeas and 39 nays (Record vote no. FC-
119):

                                             RECORD VOTE NO. FC-119
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative       Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
 Mr. Frank......................                 X              Mr. Bachus........        X
 Mr. Kanjorski..................                 X              Ms. Pryce (OH)....        X
 Ms. Waters.....................                 X              Mr. Castle........        X
 Mrs. Maloney...................                 X              Mr. King (NY).....        X
 Mr. Gutierrez..................                 X              Mr. Royce.........        X
 Ms. Velazquez..................                 X              Mr. Lucas.........        X
 Mr. Watt.......................                 X              Mr. Paul..........        X
 Mr. Ackerman...................                 X              Mr. LaTourette....
 Mr. Sherman....................                 X              Mr. Manzullo......        X
 Mr. Meeks......................                 X              Mr. Jones.........                  X
 Mr. Moore (KS).................                 X              Mrs. Biggert......        X
 Mr. Capuano....................                 X              Mr. Shays.........                  X
 Mr. Hinojosa...................                 X              Mr. Miller (CA)...        X
 Mr. Clay.......................                 X              Mrs. Capito.......
 Mrs. McCarthy..................                 X              Mr. Feeney........        X
 Mr. Baca.......................                 X              Mr. Hensarling....        X
 Mr. Lynch......................                 X              Mr. Garrett (NJ)..        X
 Mr. Miller (NC)................                 X              Ms. Brown-Waite...
 Mr. Scott......................                 X              Mr. Barrett (SC)..        X
 Mr. Green......................                 X              Mr. Gerlach.......        X
 Mr. Cleaver....................                 X              Mr. Pearce........        X
 Ms. Bean.......................                 X              Mr. Neugebauer....        X
 Ms. Moore (WI).................                 X              Mr. Price (GA)....        X
 Mr. Davis (TN).................                 X              Mr. Davis (KY)....        X
 Mr. Hodes......................                 X              Mr. McHenry.......        X
 Mr. Ellison....................                 X              Mr. Campbell......        X
 Mr. Klein......................                 X              Mr. Putnam........        X
 Mr. Mahoney (FL)...............                 X              Mrs. Bachmann.....        X
 Mr. Wilson.....................                 X              Mr. Roskam........        X
 Mr. Perlmutter.................                 X              Mr. Marchant......        X
 Mr. Murphy.....................                 X              Mr. McCotter......        X
 Mr. Donnelly...................                 X              Mr. McCarthy......        X
 Mr. Foster.....................                 X              Mr. Heller........        X
 Mr. Carson.....................                 X             ...................
 Ms. Speier.....................                 X             ...................
 Mr. Cazayoux...................                 X             ...................
 Mr. Childers...................                 X
----------------------------------------------------------------------------------------------------------------

     The following other amendments were considered:
    An amendment in the nature of a substitute by Mrs. Maloney 
(Committee Print), No. 1, was agreed to, as amended, by voice 
vote.
    An amendment by Mr. Hensarling, No. 1b, regarding reported 
history of irresponsible borrowing, was not agreed to by voice 
vote.
    An amendment by Mr. Hodes, No. 1d, regarding the effective 
date, was agreed to, as amended by the Watt substitute, by 
voice vote.
    An amendment by Mr. Castle, No. 1d(1), regarding a change 
of effective date, to the Hodes amendment, was agreed to by 
voice vote.
    An amendment by Mr. Hensarling, No. 1e, striking failure to 
make timely payments, was offered and withdrawn.
    An amendment by Mr. Ellison, No. 1f, limiting fees paid 
from subprime cards, was agreed to by voice vote.
    An amendment by Mr. Hensarling, No. 1g, regarding 
extensions of credit to underage consumers, was agreed to by 
voice vote.
    An amendment by Mrs. Maloney, No. 1j, regarding failure to 
make timely payments, was agreed to by voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 5244 prohibits certain unfair and deceptive credit 
card practices and provides consumers with tools to manage 
their credit card debt responsibly.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimate 

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, September 8, 2008.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5244, the Credit 
Cardholders' Bill of Rights Act of 2008.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark Booth.
            Sincerely,
                                                   Peter R. Orszag.
    Enclosure.

H.R. 5244--Credit Cardholders' Bill of Rights Act of 2008

    Summary: H.R. 5244 would amend the Truth in Lending Act to 
restrict a number of billing practices applied to consumer 
credit cards, including those related to changes in interest 
rates and calculations of balances to which interest rates are 
applied. It would direct the Board of Governors of the Federal 
Reserve System (Federal Reserve), in consultation with other 
financial regulatory agencies, to issue regulations 
implementing the new standards. It also would increase the 
information that the Federal Reserve is required to collect on 
the financial activities of credit card issuers, and would 
require the Federal Reserve to report to the Congress on the 
sources of industry income from such operations.
    Provisions in the legislation affecting the workload of the 
Federal Reserve and financial regulatory agencies would affect 
revenues and direct spending, respectively, but CBO estimates 
that those effects would not be significant.
    H.R. 5244 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments. The bill would 
impose private-sector mandates, as defined in UMRA, on issuers 
of credit cards. The bill would require creditors to submit 
detailed information on a semiannual basis to the Board of 
Governors of the Federal Reserve and prohibit creditors from 
performing certain credit card billing and issuing practices. 
Based on information from the Federal Reserve and industry 
sources, CBO estimates that the aggregate cost of those 
requirements would likely exceed the annual threshold 
established in UMRA for private-sector mandates ($136 million 
in 2008, adjusted annually for inflation) in at least one of 
the first five years the mandates are in effect.
    Estimated cost to the Federal Government: For this 
estimate, CBO assumes that this legislation will be enacted 
early in fiscal year 2009. CBO estimates that enacting H.R. 
5244 would affect direct spending and revenues, but that those 
effects would not be significant.
    Under this legislation, the Board of Governors of the 
Federal Reserve, in consultation with other financial 
regulatory agencies, would be required to issue regulations 
implementing the new credit card billing standards specified by 
the bill. In May 2008, the Federal Reserve (for banks), the 
Office of Thrift Supervision (for savings associations), and 
the National Credit Union Administration (for credit unions) 
proposed regulations covering some of the same practices 
addressed by H.R. 5244. The agencies proposed those regulations 
under authority granted by the Federal Trade Commission Act to 
prohibit unfair or deceptive practices. If finalized, such 
regulations would be enforced by those agencies along with the 
Office of the Comptroller of the Currency and the Federal 
Deposit Insurance Corporation.
    According to the Federal Reserve and other agencies, the 
regulatory activities required by H.R. 5244 would have no 
significant effect on their workload or budgets. In addition, 
the additional data collection and reporting requirements on 
the Federal Reserve are not anticipated to have a significant 
effect on its workload. The budgetary effects on the Federal 
Reserve are recorded as changes in revenues (governmental 
receipts). Costs incurred by the other financial regulatory 
agencies affect direct spending, but most of those expenses are 
offset by fees or income from insurance premiums. Thus, CBO 
estimates that enacting this bill would reduce revenues by less 
than $500,000 over the 2009-2018 period and would have a 
negligible net effect on direct spending.
    Estimated impact on state, local, and tribal governments: 
H.R. 5244 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments.
    Estimated impact on the private sector: The bill contains 
several private-sector mandates as defined in UMRA because it 
would require creditors to submit detailed information to the 
Federal Reserve on a semiannual basis and prohibit creditors 
from performing certain billing and issuing practices. The 
aggregate cost for creditors to comply with those mandates 
would likely exceed the annual threshold established in UMRA 
for private-sector mandates ($136 million in 2008, adjusted 
annually for inflation) in at least one of the first five years 
the mandates are in effect. The bill also includes several 
requirements that are contained in rules proposed by the 
Federal Reserve. The Federal Reserve expects that rulemaking 
process to be completed by the end of 2008.

Information collection requirements

    Under current law, the Federal Reserve collects data 
semiannually from a large sample of creditors. Those data are 
readily compiled by creditors and the cost of submitting the 
data is minimal. The bill would require the Federal Reserve to 
collect additional data from the sample creditors on various 
transactions, fees imposed, finance charges, repayments of 
balances, and on the number of accounts affected by certain 
transactions. To comply with the mandate, creditors would need 
to start to compile data on individual accounts based on the 
categories defined in the bill. According to the Federal 
Reserve and industry representatives, creditors would need to 
develop and implement new software programs and systems to 
compile the required data. Based on information from the 
Federal Reserve and industry sources, the mandate would affect 
a large number of creditors and the cost to set up those 
systems could be significant.

Over-the-limit fees

    The bill would require creditors to allow cardholders to 
establish a credit limit that cannot be exceeded. As such, 
creditors would be prevented from completing any transaction 
that would put the cardholder in excess of their credit limit. 
Under current practice, most cardholders are allowed to exceed 
their credit limit and are charged a fee for doing so. Under 
the bill, creditors would be prohibited from charging over-the-
limit fees on accounts for which the cardholder has requested a 
credit limit that cannot be exceeded. Because the bill also 
would require creditors to notify their cardholders of the 
option to establish a credit limit and provide the necessary 
tools for cardholders to do so, the Federal Reserve and 
industry representatives believe that many cardholders would 
elect to use the option. According to the Federal Reserve and 
industry sources, this requirement could significantly affect 
the amount that creditors collect in fees each year. The 
industry currently collects billions of dollars in such fees 
annually. Even if a small percentage of cardholders elected to 
use this option, creditors could lose a significant amount of 
fees.

Standards for issuing cards

    In addition, the bill would prohibit creditors from 
allowing individuals to pay any fees through the credit made 
available to them by the credit card when the terms of the 
credit card include fees in the first year totaling more than 
25 percent of the credit limit. According to the Federal 
Reserve and industry experts, credit cards with such fees are 
typically issued to individuals who have low credit scores, and 
thus, those credit cards typically carry a higher-than-average 
interest rate. The Federal Reserve believes that demand for 
such cards would fall under the bill because some customers in 
this market would no longer be able to pay the fees. The loss 
in net income to creditors could be substantial inasmuch as the 
industry currently collects billions of dollars in interest and 
fees from such cards.
    The bill also would prohibit creditors from issuing credit 
cards to individuals less than 18 years of age unless they are 
an emancipated minor. According to industry representatives and 
the Federal Reserve, individuals under 18 years old account for 
only a minuscule amount of credit cardholders. Therefore, CBO 
estimates that the cost to creditors to comply with this 
mandate would be small relative to the annual threshold 
established in UMRA.

Credit account features

    H.R. 5244 would impose several new requirements on 
creditors regarding account pricing, terms, and disclosures. 
The bill would prohibit creditors from imposing a fee on credit 
cardholders that do not pay their trailing interest balance. In 
addition, the bill would require creditors to provide a service 
through which a cardholder can determine their payoff balance. 
The bill also would prohibit creditors from informing credit 
bureaus of a cardholder's line of credit until the cardholder 
has activated his or her card. Finally, the bill would prohibit 
creditors from using the term ``prime rate'' unless its use is 
based on the definition provided in the bill. The cost for 
creditors to comply with those mandates would likely be minimal 
because compliance would involve only a small adjustment in 
current procedures, because certain fees prohibited generate a 
small portion of fee-income for the industry, and because 
creditors are unlikely to engage in the prohibited acts.

Proposed regulations

    In addition to the mandates on creditors that would be 
imposed by the bill, H.R. 5244 includes several requirements 
that the Federal Reserve has already included in proposed 
regulations. According to the Federal Reserve, the agency plans 
to finalize those regulations by the end of 2008. In general, 
those regulations would impose requirements on how creditors 
collect interest charges and fees. The mandates contained in 
the bill that are not included in the Federal Reserve's 
regulations would become effective one year after the date of 
enactment of H.R. 5244. Because the Federal Reserve would 
likely issue final regulations before that date, CBO has not 
identified those provisions as new mandates.
    Estimate prepared by: Federal Revenues: Mark Booth; Federal 
Spending: Kathleen Gramp; Impact on State, Local, and Tribal 
Governments: Elizabeth Cove; Impact on the Private Sector: 
Jacob Kuipers.
    Estimate approved by: Frank Sammartino, Deputy Assistant 
Director for Tax Analysis and Peter H. Fontaine, Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
man- dates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 5244 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation

    Section 1. Short Title. This Act may be cited as the 
``Credit Cardholders'' Bill of Rights Act of 2008''.
    Section 2(a). Prohibits creditors from raising rates 
retroactively on existing balances, subject to exceptions in 
section 2(b), and specifies acceptable arrangements for the 
consumer to pay back the existing balance. Defines ``existing 
balance'' as the balance as of 14 days after notice of the rate 
increase under section 2(c). Requires creditors to allow the 
consumer to repay the existing balance using a method at least 
as beneficial to the consumer as a five-year amortization 
period or doubling of the percentage of the balance included in 
the minimum payment before the rate increase. Prohibits 
creditors from assessing a fee based on an existing balance 
that is protected from a rate increase.
    Section 2(b). Creditors may increase the annual percentage 
rate (APR) on an existing balance only (1) if the rate is 
pegged to a variable index, (2) as a result of the expiration 
or loss of a promotional rate (as long as the APR is not 
increased to a penalty rate), or (3) if the minimum payment is 
not received within 30 days after the due date.
    Section 2(c). For any rate increase, requires a 45-day 
notice to the consumer that fully describes the changes in the 
APR in a complete and conspicuous manner and the extent to 
which such increase would apply to an existing balance.
    Section 3(a). Prohibits creditors from imposing finance 
charges based on balances for any days not included in the most 
recent billing cycle (double cycle billing). Provides 
exceptions for balances for deferred interest accrued over 
multiple cycles and for adjustment of finance charges following 
resolution of a billing error dispute.
    Section 3(b). If the outstanding balance at the end of a 
billing cycle is only from interest accrued during the 
preceding billing period on an outstanding balance that was 
fully repaid during the preceding billing period, then no fees, 
such as late fees, may be imposed on such balance attributable 
only to interest before such end of the billing period, and any 
failure to pay such balance does not constitute a default on 
the account. Such balance remains a legally binding debt 
obligation.
    Section 3(c). Requires creditors to provide on each 
statement a telephone number and Internet address for 
cardholders to request a payoff balance.
    Section 3(d). Prohibits creditors from reporting the 
issuance of any credit card to a credit bureau until the 
cardholder uses or activates the card. The fact of the inquiry 
or application for the card can be reported.
    Section 3(e). Prohibits any use of the term ``fixed rate'' 
except to refer to a rate that will not change for any reason 
over a set period of time.Prohibits any use of the term ``prime 
rate'' except to refer to the prime rate published by the Federal 
Reserve in the H.15 release. Provides that every statement shall 
display a ``due date'' for payment and that payments received (by mail 
or electronic transfer) by 5 P.M. local time at the location specified 
by the creditor for the receipt of payment on that date shall be timely 
for all purposes. Evidence provided by a consumer in the form of a 
postal receipt that the payment was sent no less than 7 days before the 
due date creates a presumption of timely payment, which may be rebutted 
by the creditor for fraud or dishonesty with respect to the mailing 
date.
    Section 3(f). Where the cardholder has two or more balances 
on a card at different interest rates, requires a creditor to 
allocate the cardholder's payments on a pro rata basis, 
reflecting the proportion each balance comprises of the total 
outstanding balance on the account. Allows the creditor to 
credit a larger portion of the payment toward the balance with 
the higher rate than is proportional, at the creditor's 
election. Creates an exception for accounts with promotional 
rate balances: any payment above the required minimum payment 
on such accounts may only be allocated to the promotional rate 
balance if all other balances have been paid off. Creates a 
similar exception for deferred interest balances, except that a 
creditor may allocate the entire amount paid by the consumer in 
excess of the required minimum payment to a deferred interest 
balance in the two billing cycles before the deferred interest 
arrangement expires. Requires creditors to give the same grace 
period for promotional rate and deferred interest accounts that 
they do for other accounts.
    Section 3(g). Requires periodic statements to be sent by 
the creditor to the consumer not less than 25 days before the 
due date.
    Section 4. Provides that a consumer may elect to prohibit 
creditors from completing any transaction in excess of the 
consumer's credit limit (a ``hard'' credit limit). Creditors 
must notify cardholders of this option annually and on any 
statement that has an overlimit fee. Bars any overlimit fee for 
transactions that exceed the credit limit where the consumer 
has elected a hard credit limit. For consumers who have not 
elected a hard credit limit, an overlimit fee may be imposed 
once during a billing cycle if the credit limit is exceeded on 
the last day of such billing cycle, and an overlimit fee may be 
imposed only once in each of the two subsequent billing cycles 
with respect to such charges in excess of the credit limit, 
unless the consumer obtains a higher credit limit during any 
such subsequent billing cycle or reduces the outstanding 
balance below the credit limit as of the end of such billing 
cycle. Prohibits overlimit fees due solely to credit holds, 
unless the actual amount of the transaction exceeds the credit 
limit.
    Section 5. Requires the Federal Reserve to collect 
additional data regarding credit card transactions and fees and 
rates charged by creditors, and to submit an annual report to 
Congress.
    Section 6. For any credit card account which has fees in 
the first year totaling over 25 percent of the credit limit, 
prohibits payment of any fees through the credit made available 
by the card except for late fees and over-the-limit-fees.
    Section 7. Prohibits knowing issuance of credit cards to 
persons under 18 who are not emancipated minors. Provides that 
a signed application is adequate proof of age.
    Section 8. Provides for a six-month period for the issuance 
of regulations by the Federal Reserve, and for a one-year 
period for the bill's requirements to take effect. Sets forth a 
Sense of Congress that the bill should not impede the 
promulgation of final regulations under existing law by 
December 31, 2008, and such regulations should apply to credit 
card transactions after 30 days from the date of promulgation.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TRUTH IN LENDING ACT

           *       *       *       *       *       *       *


TITLE I--CONSUMER CREDIT COST DISCLOSURE

           *       *       *       *       *       *       *


                     CHAPTER 2--CREDIT TRANSACTIONS

Sec.  
121. General requirement of disclosure.
     * * * * * * *
127B. Additional requirements for credit card accounts under an open end 
          consumer credit plan.
     * * * * * * *

Sec. 127. Open end consumer credit plans

  (a) * * *

           *       *       *       *       *       *       *

  (c) Disclosure in Credit and Charge Card Applications and 
Solicitations.--
          (1) * * *

           *       *       *       *       *       *       *

          (8) Extensions of credit to underage consumers.--
                  (A) In general.--No credit card may be 
                knowingly issued to, or open end credit plan 
                established on behalf of, a consumer who has 
                not attained the age of 18, unless the consumer 
                is emancipated under applicable State law.
                  (B) Rule of construction.--For the purposes 
                of determining the age of an applicant, the 
                submission of a signed application by a 
                consumer stating that the consumer is over 18 
                shall be considered sufficient proof of age.

           *       *       *       *       *       *       *


Sec. 127B. Additional requirements for credit card accounts under an 
                    open end consumer credit plan

  (a) Retroactive Rate Increases and Universal Default 
Limited.--
          (1) In general.--Except as provided in subsection 
        (b), no creditor may increase any annual percentage 
        rate of interest applicable to the existing balance on 
        a credit card account of the consumer under an open end 
        consumer credit plan.
          (2) Existing balance defined.--For purposes of this 
        subsection and subsections (b) and (c), the term 
        ``existing balance'' means the amount owed on a 
        consumer credit card account as of the end of the 
        fourteenth day after the creditor provides notice of an 
        increase in the annual percentage rate in accordance 
        with subsection (c).
          (3) Treatment of existing balances following rate 
        increase.--If a creditor increases any annual 
        percentage rate of interest applicable to credit card 
        account of a consumer under an open end consumer credit 
        plan and there is an existing balance in the account to 
        which such increase may not apply, the creditor shall 
        allow the consumer to repay the existing balance using 
        a method provided by the creditor which is at least as 
        beneficial to the consumer as 1 of the following 
        methods:
                  (A) An amortization period for the existing 
                balance of at least 5 years starting from the 
                date on which the increased annual percentage 
                rate went into effect.
                  (B) The percentage of the existing balance 
                that was included in the required minimum 
                periodic payment before the rate increase 
                cannot be more than doubled.
          (4) Limitation on certain fees.--If--
                  (A) a creditor increases any annual 
                percentage rate of interest applicable on a 
                credit card account of the consumer under an 
                open end consumer credit plan; and
                  (B) the creditor is prohibited by this 
                section from applying the increased rate to an 
                existing balance,
        the creditor may not assess any fee or charge based 
        solely on the existing balance.
  (b) Exceptions.--
          (1) In general.--A creditor may increase any annual 
        percentage rate of interest applicable to the existing 
        balance on a credit card account of the consumer under 
        an open end consumer credit plan only under the 
        following circumstances:
                  (A) Change in index.--The increase is due 
                solely to the operation of an index that is not 
                under the creditor's control and is available 
                to the general public.
                  (B) Expiration or loss of promotional rate.--
                The increase is due solely to--
                          (i) the expiration of a promotional 
                        rate; or
                          (ii) the loss of a promotional rate 
                        for a reason specified in the account 
                        agreement (e.g., late payment).
                  (C) Payment not received during 30-day grace 
                period after due date.--The increase is due 
                solely to the fact that the consumer's minimum 
                payment has not been received within 30 days 
                after the due date for such minimum payment.
          (2) Limitation on increases due to loss of 
        promotional rate.--Notwithstanding paragraph 
        (1)(B)(ii), the annual percentage rate in effect after 
        the increase permitted under such subsection due to the 
        loss of a promotional rate may not exceed the annual 
        percentage rate that would have applied under the terms 
        of the agreement after the expiration of the 
        promotional rate.
  (c) Advance Notice of Rate Increases.--In the case of any 
credit card account under an open end consumer credit plan, no 
increase in any annual percentage rate of interest may take 
effect unless the creditor provides a written notice to the 
consumer at least 45 days before the increase takes effect 
which fully describes the changes in the annual percentage 
rate, in a complete and conspicuous manner, and the extent to 
which such increase would apply to an existing balance.
  (d) Double Cycle Billing.--
          (1) In general.--No finance charge may be imposed by 
        a creditor with respect to any balance on a credit card 
        account under an open end consumer credit plan that is 
        based on balances for days in billing cycles preceding 
        the most recent billing cycle.
          (2) Exceptions.--Paragraph (1) shall not apply so as 
        to prohibit a creditor from--
                  (A) charging a consumer for deferred interest 
                even though that interest may have accrued over 
                multiple billing cycles; or
                  (B) adjusting finance charges following 
                resolution of a billing error dispute.
  (e) Limitations Relating to Account Balances Attributable 
Only to Accrued Interest.--
          (1) In general.--If the outstanding balance on a 
        credit card account under an open end consumer credit 
        plan at the end of a billing period represents an 
        amount attributable only to interest accrued during the 
        preceding billing period on an outstanding balance that 
        was fully repaid during the preceding billing period--
                  (A) no fee may be imposed or collected in 
                connection with such balance attributable only 
                to interest before such end of the billing 
                period; and
                  (B) any failure to make timely repayments of 
                the balance attributable only to interest 
                before such end of the billing period shall not 
                constitute a default on the account.
        Such balance remains a legally binding debt obligation.
          (2) Rule of construction.--Paragraph (1) shall not be 
        construed as affecting--
                  (A) the consumer's obligation to pay any 
                accrued interest on a credit card account under 
                an open end consumer credit plan; or
                  (B) the accrual of interest on the 
                outstanding balance on any such account in 
                accordance with the terms of the account and 
                this title.
  (f) Payoff Balance Information.--Each periodic statement 
provided by a creditor to a consumer with respect to a credit 
card account under an open end consumer credit plan shall 
contain the telephone number, Internet address, and Worldwide 
Web site at which the consumer may request the payoff balance 
on the account.
  (g) Consumer Right to Reject Card Before Notice of New 
Account is Provided to Consumer Reporting Agency.--
          (1) In general.--A creditor may not furnish any 
        information to a consumer reporting agency (as defined 
        in section 603) concerning the establishment of a newly 
        opened credit card account under an open end consumer 
        credit plan until the credit card has been used or 
        activated by the consumer.
          (2) Rule of construction.--Paragraph (1) shall not be 
        construed as prohibiting a creditor from furnishing 
        information about any application for credit card 
        account under an open end consumer credit plan or any 
        inquiry about any such account to a consumer reporting 
        agency (as so defined).
  (h) Use of Terms.--The following requirements shall apply 
with respect to the terms of any credit card account under any 
open end consumer credit plan:
          (1) ``Fixed'' rate.--The term ``fixed'', when 
        appearing in conjunction with a reference to the annual 
        percentage rate or interest rate applicable with 
        respect to such account, may only be used to refer to 
        an annual percentage rate or interest rate that will 
        not change or vary for any reason over the period 
        clearly and conspicuously specified in the terms of the 
        account.
          (2) Prime rate.--The term ``prime rate'', when 
        appearing in any agreement or contract for any such 
        account, may only be used to refer to the bank prime 
        rate published in the Federal Reserve Statistical 
        Release on selected interest rates (daily or weekly), 
        and commonly referred to as the H.15 release (or any 
        successor publication).
          (3) Due date.--
                  (A) In general.--Each periodic statement for 
                any such account shall contain a date by which 
                the next periodic payment on the account must 
                be made to avoid a late fee or be considered a 
                late payment, and any payment received by 5 
                P.M., local time at the location specified by 
                the creditor for the receipt of payment, on 
                such date shall be treated as a timely payment 
                for all purposes.
                  (B) Certain electronic fund transfers.--Any 
                payment with respect to any such account made 
                by a consumer on-line to the Web site of the 
                credit card issuer or by telephone directly to 
                the credit card issuer before 5 P.M., local 
                time at the location specified by the creditor 
                for the receipt of payment, on any business day 
                shall be credited to the consumer's account 
                that business day.
                  (C) Presumption of timely payment.--Any 
                evidence provided by a consumer in the form of 
                a receipt from the United States Postal Service 
                or other common carrier indicating that a 
                payment on a credit card account was sent to 
                the issuer not less than 7 days before the due 
                date contained in the periodic statement under 
                subparagraph (A) for such payment shall create 
                a presumption that such payment was made by the 
                due date, which may be rebutted by the creditor 
                for fraud or dishonesty on the part of the 
                consumer with respect to the mailing date.
  (i) Pro Rata Payment Allocations.--
          (1) In general.--Except as permitted under paragraph 
        (2), if the outstanding balance on a credit card 
        account under an open end consumer credit plan accrues 
        interest at 2 or more different annual percentage 
        rates, the total amount of each periodic payment made 
        on such account shall be allocated by the creditor 
        between or among the outstanding balances at each such 
        annual percentage rate in the same proportion as each 
        such balance bears to the total outstanding balance on 
        the account.
          (2) Allocation to higher rate.--Notwithstanding 
        paragraph (1), a creditor may elect, in any case 
        described in such paragraph, to allocate more than a 
        pro rata share of any payment to a portion of the 
        outstanding balance that bears a higher annual 
        percentage rate than another portion of such 
        outstanding balance.
          (3) Special rules for accounts with promotional rate 
        balances or deferred interest balances.--
                  (A) In general.--Notwithstanding paragraph 
                (1) or (2), in the case of a credit card 
                account under an open end consumer credit plan 
                the current terms of which allow the consumer 
                to receive the benefit of a promotional rate or 
                deferred interest plan, amounts paid in excess 
                of the required minimum payment shall be 
                allocated to the promotional rate balance or 
                the deferred interest balance only if other 
                balances have been fully paid.
                  (B) Exception for deferred interest 
                balances.--Notwithstanding subparagraph (A), a 
                creditor may allocate the entire amount paid by 
                the consumer in excess of the required minimum 
                periodic payment to a balance on which interest 
                is deferred during the 2 billing cycles 
                immediately preceding the expiration of the 
                period during which interest is deferred.
          (4) Prohibition on restricted grace periods under 
        certain circumstances.--If, with respect to any credit 
        card account under an open end consumer credit, a 
        creditor offers a time period in which to repay credit 
        extended without incurring finance charges to 
        cardholders who pay the balance in full, the creditor 
        may not deny a consumer who takes advantage of a 
        promotional rate balance or deferred interest rate 
        balance offer with respect to such an account any such 
        time period for repaying credit without incurring 
        finance charges.
  (j) Timely Provision of Periodic Statements.--Each periodic 
statement with respect to a credit card account under an open 
end consumer credit plan shall be sent by the creditor to the 
consumer not less than 25 calendar days before the due date 
identified in such statement for the next payment on the 
outstanding balance on such account, and section 163(a) shall 
be applied with respect to any such account by substituting 
``25'' for ``fourteen''.
  (k) Opt-Out of Creditor Authorization of Over-the-Limit 
Transactions if Fees Are Imposed.--
          (1) In general.--In the case of any credit card 
        account under an open end consumer credit plan under 
        which an over-the-limit-fee may be imposed by the 
        creditor for any extension of credit in excess of the 
        amount of credit authorized to be extended under such 
        account, the consumer may elect to prohibit the 
        creditor, with respect to such account, from completing 
        any transaction involving the extension of credit, with 
        respect to such account, in excess of the amount of 
        credit authorized by notifying the creditor of such 
        election in accordance with paragraph (2).
          (2) Notification by consumer.--A consumer shall 
        notify a creditor under paragraph (1)--
                  (A) through the notification system 
                maintained by the creditor under paragraph (4); 
                or
                  (B) by submitting to the creditor a signed 
                notice of election, by mail or electronic 
                communication, on a form issued by the creditor 
                for purposes of this subparagraph.
          (3) Effectiveness of election.--An election by a 
        consumer under paragraph (1) shall be effective 
        beginning 3 business days after the creditor receives 
        notice from the consumer in accordance with paragraph 
        (2) and shall remain effective until the consumer 
        revokes the election.
          (4) Notification system.--Each creditor that 
        maintains credit card accounts under an open end 
        consumer credit plan shall establish and maintain a 
        notification system, including a toll-free telephone 
        number, Internet address, and Worldwide Web site, which 
        permits any consumer whose credit card account is 
        maintained by the creditor to notify the creditor of an 
        election under this subsection in accordance with 
        paragraph (2).
          (5) Annual notice to consumers of availability of 
        election.--In the case of any credit card account under 
        an open end consumer credit plan, the creditor shall 
        include a notice, in clear and conspicuous language, of 
        the availability of an election by the consumer under 
        this paragraph as a means of avoiding over-the limit 
        fees and a higher amount of indebtedness, and the 
        method for providing such notice--
                  (A) in the periodic statement required under 
                subsection (b) with respect to such account at 
                least once each calendar year; and
                  (B) in any such periodic statement which 
                includes a notice of the imposition of an over-
                the-limit fee during the period covered by the 
                statement.
          (6) No fees if consumer has made an election.--If a 
        consumer has made an election under paragraph (1), no 
        over-the-limit fee may be imposed on the account for 
        any reason that has caused the outstanding balance in 
        the account to exceed the credit limit.
          (7) Regulations.--
                  (A) In general.--The Board shall issue 
                regulations allowing for the completion of 
                over-the-limit transactions that for 
                operational reasons exceed the credit limit by 
                a de minimis amount, even where the cardholder 
                has made an election under paragraph (1).
                  (B) Subject to no fee limitation.--The 
                regulations prescribed under subparagraph (A) 
                shall not allow for the imposition of any fee 
                or any rate increase based on the permitted 
                over-the-limit transactions.
  (l) Over-the-Limit Fee Restrictions.--With respect to a 
credit card account under an open end consumer credit plan, an 
over-the-limit fee may be imposed only once during a billing 
cycle if, on the last day of such billing cycle, the credit 
limit on the account is exceeded, and an over-the-limit fee, 
with respect to such excess credit, may be imposed only once in 
each of the 2 subsequent billing cycles, unless the consumer 
has obtained an additional extension of credit in excess of 
such credit limit during any such subsequent cycle or the 
consumer reduces the outstanding balance below the credit limit 
as of the end of such billing cycle.
  (m) Over-the-Limit Fees Prohibited in Conjunction with 
Certain Credit Holds.--Notwithstanding subsection (l), an over-
the-limit fee may not be imposed if the credit limit was 
exceeded due to a hold unless the actual amount of the 
transaction for which the hold was placed would have resulted 
in the consumer exceeding the credit limit.
  (n) Standards Applicable to Initial Issuance of Subprime or 
``Fee Harvester'' Cards.--
          (1) In general.--In the case of any credit card 
        account under an open end consumer credit plan the 
        terms of which require the payment of fees (other than 
        late fees or over-the-limit fees) by the consumer in 
        the first year the account is opened in an amount in 
        excess of 25 percent of the total amount of credit 
        authorized under the account, no payment of any fees 
        (other than late fees or over-the-limit fees) may be 
        made from the credit made available by the card.
          (2) Rule of construction.--No provision of this 
        subsection may be construed as authorizing any 
        imposition or payment of advance fees otherwise 
        prohibited by any provision of law.

           *       *       *       *       *       *       *


Sec. 136. Dissemination of annual percentage rates

  (a) * * *
  (b) Credit Card Price and Availability Information.--
          (1) [Collection required.--The Board shall] 
        Collection required.--
                  (A) In general.--The Board shall collect, on 
                a semiannual basis, credit card price and 
                availability information, including the 
                information required to be disclosed under 
                section 127(c) of this chapter, from a broad 
                sample of financial institutions which offer 
                credit card services.
                  (B) Information to be included.--The 
                information under subparagraph (A) shall 
                include, for the relevant semiannual period, 
                the following information with respect each 
                creditor in connection with any consumer credit 
                card account:
                          (i) A list of each type of 
                        transaction or event during the 
                        semiannual period for which 1 or more 
                        creditors has imposed a separate 
                        interest rate upon a consumer credit 
                        card accountholder, including 
                        purchases, cash advances, and balance 
                        transfers.
                          (ii) For each type of transaction or 
                        event identified under clause (i)--
                                  (I) each distinct interest 
                                rate charged by the card issuer 
                                to a consumer credit card 
                                accountholder during the 
                                semiannual period ; and
                                  (II) the number of 
                                cardholders to whom each such 
                                interest rate was applied 
                                during the last calendar month 
                                of the semiannual period, and 
                                the total amount of interest 
                                charged to such accountholders 
                                at each such rate during such 
                                month.
                          (iii) A list of each type of fee that 
                        1 or more of the creditors has imposed 
                        upon a consumer credit card 
                        accountholder during the semiannual 
                        period, including any fee imposed for 
                        obtaining a cash advance, making a late 
                        payment, exceeding the credit limit on 
                        an account, making a balance transfer, 
                        or exchanging United States dollars for 
                        foreign currency.
                          (iv) For each type of fee identified 
                        under clause (iii), the number of 
                        accountholders upon whom the fee was 
                        imposed during each calendar month of 
                        the semiannual period, and the total 
                        amount of fees imposed upon cardholders 
                        during such month.
                          (v) The total number of consumer 
                        credit card accountholders that 
                        incurred any finance charge or any 
                        other fee during the semiannual period.
                          (vi) The total number of consumer 
                        credit card accounts maintained by each 
                        creditor as of the end of the 
                        semiannual period.
                          (vii) The total number and value of 
                        cash advances made during the 
                        semiannual period under a consumer 
                        credit card account.
                          (viii) The total number and value of 
                        purchases involving or constituting 
                        consumer credit card transactions 
                        during the semiannual period.
                          (ix) The total number and amount of 
                        repayments on outstanding balances on 
                        consumer credit card accounts in each 
                        month of the semiannual period.
                          (x) The percentage of all consumer 
                        credit card accountholders (with 
                        respect to any creditor) who--
                                  (I) incurred a finance charge 
                                in each month of the semiannual 
                                period on any portion of an 
                                outstanding balance on which a 
                                finance charge had not 
                                previously been incurred; and
                                  (II) incurred any such 
                                finance charge at any time 
                                during the semiannual period.
                          (xi) The total number and amount of 
                        balances accruing finance charges 
                        during the semiannual period.
                          (xii) The total number and amount of 
                        the outstanding balances on consumer 
                        credit card accounts as of the end of 
                        such semiannual period.
                          (xiii) Total credit limits in effect 
                        on consumer credit card accounts as of 
                        the end of such semiannual period and 
                        the amount by which such credit limits 
                        exceed the credit limits in effect as 
                        of the beginning of such period.
                          (xiv) Any other information related 
                        to interest rates, fees, or other 
                        charges that the Board deems of 
                        interest.

           *       *       *       *       *       *       *

          (5) Report to congress.--The Board shall, on an 
        annual basis, transmit to Congress and make public a 
        report containing estimates by the Board of the 
        approximate, relative percentage of income derived by 
        the credit card operations of depository institutions 
        from--
                  (A) the imposition of interest rates on 
                cardholders, including separate estimates for--
                          (i) interest with an annual 
                        percentage rate of less than 25 
                        percent; and
                          (ii) interest with an annual 
                        percentage rate equal to or greater 
                        than 25 percent;
                  (B) the imposition of fees on cardholders;
                  (C) the imposition of fees on merchants; and
                  (D) any other material source of income, 
                while specifying the nature of that income.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    The way that consumers pay for products and services is 
dramatically changing, with electronic payments (credit and 
debit cards) now accounting for more than half of all 
transactions. Given the crucial role that credit cards have 
come to play for individual consumers and the economy, it is 
both timely and appropriate to consider new ways to protect 
consumers from unfair and deceptive credit card practices, and 
to ensure that they receive useful and complete disclosures 
about the terms and conditions governing their cards. But 
policymakers must realize that in endeavoring to protect 
consumers, they may end up imposing significant costs on the 
U.S. economy, because such measures might both raise the costs 
of credit for some and unfairly limit access to credit to 
others.
    To protect consumers who use credit cards, the Federal 
Reserve proposed new rules on May 2, 2008. Utilizing its 
statutory authority under the Federal Trade Commission (FTC) 
Act to prevent ``unfair or deceptive acts or practices,'' the 
Federal Reserve promulgated new rules that will address many of 
the practices that consumers find confusing. The Federal 
Reserve has also moved to require credit card issuers to make 
more effective and transparent disclosures so that cardholders 
will have a more complete understanding of their credit card 
terms. This extensive rule-writing process incorporates wide-
ranging consumer testing conducted by the Federal Reserve staff 
to ensure that the new rules will be effective, and provides 
for a public comment period to evaluate the proposed rule. That 
comment period closed on August 4. But rather than await the 
results of the Federal Reserve's work, the Committee instead 
chose to mark up H.R. 5244, ``The Credit Cardholder's Bill of 
Rights Act,'' on July 31.
    Rather than allowing the Federal Reserve to finish the job 
we gave them by statute--and before the comment period on the 
Federal Reserve's proposed rules had even closed or the Federal 
Reserve had time to digest the more than 40,000 comment letters 
that it received from consumer advocates, industry 
representatives, and other regulators--this Committee 
interjected itself in the process. A far better course would 
have been the one suggested by the 14 Members of this 
Committee--seven Democrats and seven Republicans--who wrote to 
the Chairman to ask for hearings on the Federal Reserve's 
proposed rules before deciding whether passing legislation 
limiting credit card practices was necessary or appropriate.
    The Majority cannot credibly contend that the powers 
granted by the FTC Act are inadequate or that the regulators 
are stalling. Nothing in this ill-conceived legislation 
strengthens the Federal Reserve's consumer protection mandate. 
The FTC Act is a sweeping statute that provides the Federal 
Reserve with the extensive authority to issue rules prohibiting 
banks from engaging in acts or practices that are unfair or 
deceptive. The FTC Act also provides the same authority to the 
Office of Thrift Supervision (OTS) for thrifts and the National 
Credit Union Administration (NCUA) for credit unions. Working 
jointly with the OTS and NCUA, the Federal Reserve has 
identified credit card practices that it believes are 
problematic and has developed uniform rules to address them. 
And these rules will soon take effect: Federal Reserve Board 
Chairman Bernanke has promised to implement them before the end 
of the year.
    Further, it is not as if the Committee and the regulators 
were addressing different issues. H.R. 5244 has been designed 
to address consumer concerns about card companies accruing 
finance charges because of two-cycle billing computation 
methods; increasing interest rates retroactively; allocating 
payments to maximize interest rate charges; and providing 
inadequate time to make payments. The proposed regulations 
cover these exact same concerns.
    Because the regulators are so near the end of a careful, 
considered rulemaking process addressing the very same issues 
covered by this bill, passing H.R. 5244 was an unnecessary 
exercise in partisan political posturing. We can understand 
racing to beat the clock. We cannot understand racing to beat 
the Fed.

                                   Spencer Bachus.
                                   Jeb Hensarling.
                                   Dean Heller.
                                   Randy Neugebauer.
                                   Thaddeus McCotter.
                                   Judy Biggert.
                                   John Campbell.
                                   Geoff Davis.
                                   Ed Royce.
                                   Kevin McCarthy.
                                   Kenny Marchant.
                                   Michele Bachmann.
                                   Michael N. Castle.
                                   Ginny Brown-Waite.
                                   Thomas Price.

                                  
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