• Rate increases on existing balances due to “any time,  any reason” or “universal default” are banned, and retroactive rate increases due to late payments are severely restricted.
• Contract terms must be clearly spelled out and must remain stable for the first year. Promotional rates may still be offered with new accounts or during the life of an account, but these rates must be clearly disclosed and last at least six months.
• Card issuers must give consumers a reasonable time to pay the monthly bill — at least 21 days from the time of mailing. This provision ends late fee traps such as weekend deadlines, due dates that change each month, and deadlines that fall in the middle of the day.
• Credit card companies will be required to apply excess payments to the highest-interest balance first and end the use of the balance in a previous month to calculate interest charges on the current month, so-called “double-cycle” billing.
• Customer approval must be obtained to process transactions that would place the account over the limit.
• Fees on subprime, low-limit cards will be substantially restricted.
• Enhanced disclosure requirements regarding fees for gift and stored value cards, and restriction of inactivity fees unless the card has been inactive for at least 12 months.
• Conspicuous display on statements of how long it would take to pay off the existing balance and the total interest cost if consumers pay only minimum payments, and display of the payment amount and total interest cost to pay off the existing balance in 36 months.
• Contracts must be available on the internet and be in plain language.

The act also has new provisions concerning the marketing of credit cards to college students and young adults, including a requirement that card issuers and universities disclose agreements with respect to the marketing or distribution of credit cards to students.

Card issuers who violate the new provisions will also face significantly higher penalties than under current law, and regulators are given greater powers and responsibilities. For a more in-depth discussion of the goals and key elements of the new legislation, visit the website of the Office of the Press Secretary to the White House.

The information covers a wide range of consumer issues, including debt collection, frauds and scams, identify theft, mortgage fraud, price gouging, and tenants’ rights, and each topic is explained in an easy to understand format.

While it is often necessary to consult an attorney to take specific action in an individual case, the information available from the Office of the Attorney General is a good starting place to educate yourself about your consumer rights under the laws of the State of Texas and the Federal government.

The Associated Press reports that the Obama administration believes such safeguards could have minimized the damage of the recent financial meltdown. A concerned banking industry, however, is taking aim at the proposed watchdog agency, stating that they are being unfairly cast as villains. Banks fear that a new agency would create conflicting layers of regulation and give outsiders broad sway over their products and services.

According to Wayne Abernathy, head of financial institutions policy at the American Bankers Association, “We think this agency is a mistaken piece of the overall program and not something that needs to be done. This agency is going to be deciding what products we should offer instead of our customers telling us what they want.”

Abernathy said that his group, which represents most of the nation’s 8,000 banks, would push the administration to “replace” the agency with another entity. However, about 200 consumer protection groups are joining forces to defend the proposed agency. Their success could determine how sweeping and long-lasting the financial overhaul turns out to be.

Most industry objections ignore the problems exposed by the financial crisis, said Harvard Law School Professor Elizabeth Warren, head of a congressional panel overseeing the financial bailout and a key architect of the consumer agency. “The government makes sure the products that are sold are readable, and it makes sure the products that they are sold are understood by the people who want them. I’m not sure why the banking industry would be resistent to that,” Warren said.

The proposed bill was sent to Congress by President Obama on June 30, 2009. Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, called the proposal one of his highest priorities and said his panel would consider it in July as part of a broader effort to overhaul federal regulations on the entire financial industry.

Sen. Christopher Dodd, also vowed to steer the proposal through the Senate Banking Committee he chairs, despite staunch opposition from the banking industry. “It is unbelievable that some of the same irresponsible actors that helped create the current financial mess would argue that we are doing too much for consumers,” said Dodd, D-Conn.

At last week’s news conference, Wendy Davis, D-Fort Worth, stated, “It is high time we put an end to the obscene profits that they are making off of our families who are just trying to make ends meet.” Davis is the sponsor of Senate Bill 2131, which intends to regulate credit service organizations (“CSOs”) that make payday loans. The Senate bill would place CSOs under the authority of the Texas Consumer Credit Commissioner, who would license the lenders, impose fee restrictions, and oversee debt collection practices.

Payday loans are small, short-term loans that are structured as advances on the borrower’s next paycheck. The borrower pays a fee and writes a post-dated check that the company agrees not to cash until the borrower’s payday. The normal fee for that service is equal to an annual interest rate of around 400%, although fees in excess of 1,100% are not uncommon.

Frequently, the borrower cannot afford to repay the loan out of their next paycheck, and the loan is either “renewed” for additional fees, or the post-dated check is dishonored when it is presented to the bank. Payday lenders have been accused of using illegal and abusive debt collection practices when attempting to collect funds to cover the dishonored checks.

Texas ranks fourth nationally in the number of payday lenders, and several Texas cities (including Fort Worth, El Paso, and San Antonio) have more businesses offering payday loans, check cashing, and pawn loans than they have bank and credit union branches. Fort Worth-based Cash America, the nation’s largest operator of pawnshops, has hired lobbyists and started a political action committee that gave more than $170,000 to national candidates in the run-up to the 2008 elections.

Rep. Luis Gutierrez, D-Ill., has sponsored a bill in Congress that would regulate the payday loan industry and provide crucial protections for borrowers. Gutierrez is the top Democrat on the Financial Services subcommittee, which is in charge of consumer credit issues. Although he originally wanted to ban the payday loan industry entirely, he says his bill is the best deal he could manage in the face of the industry’s aggressive lobbying. “While they may not be JPMorgan, Chase, or Bank of America, they’re very powerful,” he said.

Advocates of payday lending defend their practices, saying that the loans are very economical compared to the cost of several bounced checks, and that they are the only quick-credit option for many low-income and moderate-income people. Critics contend that the loans are inherently abusive products that trap borrowers in a devastating cycle of debt.