credit cards

I'm just the messenger:

Campus Progress:

Credit Card Bill will Help Young People & Students

Washington, DC -- Today Congress passed the Credit Cardholders’ Bill of Rights by a margin of 361-64 in the House of Representatives, following yesterday’s vote of 90 to 5 in the Senate. The President is expected to sign the bill on Friday afternoon. “By passing this legislation, Congress took a big step toward extending basic protections to all credit card borrowers, especially young people and students,” said Erica Williams, Deputy Director of Campus Progress, who testified before the House Financial Services Committee on this issue last summer on behalf of Campus Progress Action.

Currently, young people and college students are aggressively targeted by credit card companies because they have less experience with credit, and because borrowers tend to hold on to their first card for a very long time. Card companies have also entered into controversial multi-million dollar deals with schools in order to purchase student contact information, issue co-branded cards, and access students through on-campus booths and sporting events. Often card companies single out students with “special offers” despite their lack of income or co-signer.

The Credit Cardholders’ Bill of Rights specifically helps young people by limiting unsolicited marketing to young adults (18-21), and ensures that young adults have either a co-signer or an independent means of repayment – in other words, card companies will treat young people more like any other potential borrower. The bill will also require that colleges disclose campus marketing agreements with credit card companies, and that credit card companies report the agreements to the federal government.

Finally, the legislation will also extend basic protections – such as limits on over-the-limit and late fees – to credit card borrowers and curtail some of the card industry’s worst abuses.

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Student PIRGs:

Statement of Ed Mierzwinski, Consumer Program Director On Senate Passage of the Credit CARD Act

“U.S. PIRG commends the Senate on overwhelming passage of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, S 414, as introduced by Senator Chris Dodd, Chair of the Senate Banking Committee. While the House has already passed a similar Credit Cardholders Bill of Rights, we expect that the House will simply pass the identical Senate bill so Congress can send a final bill for the President to sign before Memorial Day.

“For too long, owning a credit card company has been a license to steal. Over the last few years, the banks increased their use of abusive tactics, such as changing due dates so they could trick consumers into paying late. Worse, they charged a double whammy—a high late fee first and then tripled interest rates to 36% APR or more. Second, they started charging good customers higher rates because they supposedly paid some other creditor late (universal default). But that wasn’t enough, so they started raising the rates of customers who’d been late to no creditor, for no reason at all. That was their biggest mistake. Gouging everyone caused thousands and thousands of Americans who just want a fair deal to contact Congress and even the Federal Reserve.

“The Credit Card Act bans nearly all retroactive rate increases on current balances, it prohibits universal default in the first year and it protects college students from unfair marketing of credit cards.

“I’ve been in Washington twenty years. For the first 19 we couldn’t even get a committee vote on credit card reform despite these practices.

“Due to abusive practices by credit card companies, we are now on the verge of historic credit card reform. Is it everything we want? No, we should also ban raising rates going forward, not just retroactively, and we should ban forced arbitration clauses in credit card contracts and reinstate usury ceilings. But final passage of this historic credit card reform legislation will stop big credit card companies, many of which are feeding at the TARP taxpayer trough, from cheating Americans out of their hard-earned money. That will help working families so that they can become part of our economic recovery, not lurch on a credit card debt treadmill. It’s about time.”

• The Kent County GOP has gotten hip to Drinking Liberally and is using a similar model to engage local youth.
• Here's a new iPhone app that will let you track the voting records of elected officials.
• danah boyd answers all the questions you had about teens and social media use.
• Campus Progress has video from their latest panel on Millennial Politics.
• Rock the Vote looks at how credit cards are keeping young people down.
• Roll Call discusses how the passage of Civil Rights was the beginning of the end for the GOP.
• Peter Levine critiques the White House Office of Public Engagement.
• Do Young Folks Need Celebrities To Tell Them How To Vote?

A good mix today -- some technology, service, and policy for you. Enjoy!

• Gavin Newsom, Mayor of San Francisco, uses technology to announce his campaign for California's governorship, with his campaign focusing on generational change as a message.
• Steve Schmidt and David Plouffe took the time to sit down and talk about the 2008 election at the University of Delaware Thursday night. Plouffe talked about the importance of young voters to the campaign and the point in time when the Obama campaign sensed the momentum changing.
• Youth Service America's Global Youth and Service Day events are being held this weekend. From a press release: "During GYSD, the largest service event in the world and an initiative of Youth Service America (YSA), young people will participate in and facilitate projects with families, schools, community and faith-based organizations, and businesses; they focus on serious issues such as climate change, education, poverty, health, hunger and homelessness." Over 1,800 projects were planned around the world for this event -- double the number of projects held last year.
• techPresident covers the signing of the Serve America Act, specifically the development of serve.gov, a Web 2.0 clearinghouse for service opportunities run by the government.
• Google and Personal Democracy Forum are launching a fellowship program for those interested in developing new ways of using technology to make change and influence government and policy:
  

  Google and Personal Democracy Forum are teaming up to offer registration fellowships that cover the full forum registration costs and a meal with Googlers for twenty well-qualified, creative political entrepreneurs to attend this year's conference on June 29-30 at Jazz at Lincoln Center in New York City.

  Fellows will be chosen based on evidence of how you've turned ideas into action and into new applications of technology in the political or civic arena.

  Go to the link and apply by May 8th if interested.

• The House Financial Services Committee passed the Credit Cardholders' Bill of Rights (H.R. 627) on Wednesday. The House passed similar legislation last year, but it stalled in the Senate.
• Sen. Ben Nelson (D-NE) is a bit upset that he won't be able to reap the benefits of serving as a hero to the private student loan industry. Obama and the House and Senate negotiators in the budget process have agreed to use budget reconciliation for student lending legislation, effectively diminishing Nelson's influence. Ezra Klein reports.
• Speaking of Ezra Klein, someone got a new gig at the Washington Post. Klein's post on this can be found here. Klein starts May 18.
• An alternative view of Ashton Kutcher's Twitter quest at AdAge.

With the Credit Card Holder's Bill of Rights voted out of committee yesterday, the full House goes to vote next week. According to the Speaker's Blog

"The Credit Cardholders’ Bill of Rights protects Americans against the unfair and often abusive practices of credit card companies. Americans should never be subject to excessive credit card fees, sky-high interest rates, and unfair, incomprehensible agreements that credit card companies revise at will. But during a recession, with so many families in economic peril, these practices can be devastating.

This legislation is a departure from an era of government indifference to anti-consumer practices. I commend Congresswoman Carolyn Maloney for her tenacious work on this legislation in the face of continued opposition from corporate interests. I look forward to a strong, bipartisan vote in favor of the Credit Cardholders’ Bill of Rights and to working with the Senate to send this critical pro-consumer legislation to President Obama for his signature into law."

While the economy is in freefall and CEOs are jumping out of windows, Americans are seeking refuge in bankruptcy courts and in the offices of credit counselors across the country. Young people are no different.

What predatory lenders peppering corners with high interest pay-day loans are to the poor, blood sucking credit card companies offering free t-shirts and unlimited cash on campuses are to youth.

In a report this week from the Online News Hour

"According to a study commissioned by Sallie Mae researchers, the average undergraduate carries $3,173 of credit card debt -- the highest level since researchers started collecting data in 1998."

The current legislation includes a section forbidding credit cards to emancipated minors under 18 years old. That's a pretty small community of people, and provides zero protection for students on campuses and new high school graduates. The Online News Hour piece referenced above suggested originally Congress was considering making it harder to issue credit to anyone under 21. The piece also mentions a hardcore lobby effort from the Bankers Association, which is probably the reason for the 21 to 17 and under emancipated youth switcharoo. The partnering Senate Bill The Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) proposed by Sen. Chris Dodd has the 21 year old limit.

The House Bill is a joke. As open as I'm sure so many progressives want to be, lets be realistic. Credit.com reports that a majority of young people begin establishing lines of credit between 18 and 22. They also say that the majority of those 18-22 year olds don't understand how their financial decisions impact their credit.

At the same time

"Credit card companies spend billions of dollars marketing to young people through the Internet, television, phone and old-fashioned brochures in the mail offering pre-approval, low interest rates, and even "free money" if you sign up now.

They are especially aggressive on college campuses, buying lists of students from schools and entering into agreements that allow them to set up tables in front of dining areas and activity fairs.

"They were everywhere...like vultures: outside of my dorm, at football games and in the quad. I took their teddy bears, free pizza, tote bags and complicated, convoluted signup forms," Kali Dun, a University of Virginia student, told a congressional hearing on credit card abuses. "

Many colleges have banned the vultures and some state governments have worked from their level to protect students. Is it so much to ask that the feds do the same?

The Newsletter for the Federal Courts warned, years ago, that young consumers should be wary about credit card companies and their practices.

"Many of the debtors who come into bankruptcy court admit that if someone had warned them about the pitfalls, they would not be in that predicament," said Chief Bankruptcy Judge John Ninfo of the U.S. Bankruptcy Court for the Western District of New York. . .

"It is especially troubling that more and more young people are falling victim to credit card abuse and turning to bankruptcy as a means to relieve their oppressive debts," Chief Judge John Walker of the U.S. Court of Appeals for the Second Circuit added."

I'm grateful for Sen. Dodd's 21 year old cap but I wish both bills would make all public universities a safe haven from credit card companies that pull the rug of financial stability out from under young consumers.