New credit card rules to protect Nebraska

Time and again, I have heard from Nebraskans who have been treated unfairly by their credit card companies. The stories I heard are the reason why I voted for a tough new credit card holders' bill of rights, which took effect in the last week of February. An overwhelming majority of Nebraskans who contacted me supported cracking down on the worst practices of credit card companies and getting some fairness back into the system. So many of these stories were from Nebraskans who play by the rules, are on time with their payments, keep balances low, and manage their credit in order to maintain a good credit score, but still needed help.

Stories from Nebraskans

One Nebraskan had a credit card for over three years, was never once late on a payment, and then opened up his statement one day to discover that the card's interest rate had doubled without warning, along with his minimum payment.

Another Nebraskan had a spotless 30-year credit history when she inadvertently missed a single payment on a card she rarely used. She tried to correct the problem quickly, but the damage had already been done. The result was that her credit score dropped sharply and the interest rates on her other cards skyrocketed. One went from 8% to 28 percent overnight.

There are so many similar stories from not only all corners of our state, but also from across the country. In such tough economic times, these kinds of issues added insult to injury for Nebraskans who were trying to be responsible and were caught by unfair practices.

Fairer Rules For Consumers

These kinds of problems were all too common, and they're why last year with my support Congress passed the Credit Card Accountability Responsibility and Disclosure Act of 2009. It places tough new restrictions on credit card companies and protects card holders from arbitrary rate hikes and other deceptive practices. As the end of last month, it went into full effect.

Nebraskans may have begun to notice some of the changes already. The bill protects consumers from arbitrary interest rate, fee and finance charge increases. It prohibits universal default on existing balances, which is when missing a payment on one card causes your interest rate to spike on all your other cards. It will stop so many of the stories I heard from happening again.

It also cuts down on excessive fees that companies charge for making online payments and would require companies to be clearer about how long it takes to pay down a balance when someone makes only the minimum payments.

It puts a stop to interest charges on paid-off balances from a previous billing cycle which is also known as a double-cycle billing ban.

It will require payments to be applied first to the credit card balance with the highest interest rate.

It provides protection for students and other young consumers from aggressive credit card solicitations.

As of the end of last month, Americans should start seeing the benefits of this bipartisan legislation which is a major victory for consumers across the country.