Issuers Must Provide Total Time and Cost of Debt
Congressman Jim Moran, Virginia Democrat, joined with Representative David Price (D-NC) to successfully offer an amendment to the “Credit Cardholders’ Bill of Rights Act” (H.R. 627). The amendment requires that credit card companies provide regular information in cardholders’ billing statements regarding how long it will take to pay off their debt and how much it will cost under different scenarios, such as if only the minimum monthly payment is made.
“This critical consumer protection gives Americans a road map to get out from under crippling credit card debt,” said Moran. “We’re making clear that by only paying the monthly minimum, payments will increase each month indefinitely.”
The three pieces of information cardholders must be provided at least once per quarter on their billing statements include:
“¢ How long it would take the cardholder to pay off the entire balance if only the minimum monthly payment is paid.
“¢ The total cost to the consumer of only making the required minimum payments, with a breakdown of the resulting principal and interest shares of the total cost.
“¢ The estimated monthly payments required for the consumer to pay off the entire balance in a period of 12, 24 and 36 months.
“Defaults on credit card debt may be the next wave to hit our economy. Our amendment helps mitigate this risk, providing clear, concise and critical information to help consumers construct a plan to become debt-free.”