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April 2009

The following timeline and details will be updated as the Credit Cardholders’ Bill of Rights, now merged with and known as the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, progresses through Congress and as the bill makes its way to the President to be signed into law. Visit this article often for the latest information and to read the current versions of the bills as they are amended, voted upon, and revised.

Credit Cardholders’ Bill of Rights Reverse Timeline

August 22, 2010: The Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 is fully in effect for existing and new credit card accounts.
February 22, 2010: Some provisions of the Credit CARD Act go into effect today, particularly rules for new credit card accounts.
May 22, 2009: President Obama signs the Credit Card Act of 2009 (which has been merged with the Cardholders’ Bill of Rights), H.R.627, and the new regulations will begin to take effect starting in February 2010.
May 20, 2009: The House of Representatives agrees to the Senate’s version of H.R.627 and sends the bill to the President to sign.
May 19, 2009: The Senate passes H.R.627 with a vote of 90 to 5.
May 12, 2009: The bipartisan Senate Banking Committee has agreed on the Credit CARD Act of 2009 (S.414).
May 11, 2009: The Senate proposed an amendment to the Credit CARD Act (H.R.627) as passed by the House of Representatives.
April 30, 2009: The House passes H.R.627 with a bipartisan vote of 357 to 70.
February 11, 2009: S.414 is introduced in the Senate
January 22, 2009: H.R.627 is introduced in the House.
January 14, 2009: The Credit Cardholders’ Bill of Rights (S.235) is introduced in the Senate.

Credit Cardholders’ Bill of Rights Details

On April 30, 2009, the House of Representatives passed a bill commonly called the Credit Cardholders’ Bill of Rights Act of 2009. This bill goes a long way to end some deceprive practices used by credit card companies to lure and trap consumers into expensive debt. While many of the problems resulting from these practices can be avoided by using credit wisely or not at all and adjusting your expectations to assume that the companies only care about their bottom line, not their customers, not all the blame can be placed on the consumer.

Thus, the government is stepping in with this effort to protect credit card users from practices such as abrupt rate increases, retroactive rate increases, and double-cycle billing, a situation in which customers are charged interest even after the last monthly bill to include charges for spending is fully paid off.

Here are some interesting points included in the House version of the bill.

  • Credit card issuers will be required to maintain low introductory rates for at least six months.
  • Issuers must warn consumers if they are spending close to their credit limit, allowing them to avoid a penalty.
  • Issuers cannot charge customers a fee for paying their bill over the phone or online.

The changes to credit card regulations will begin taking effect in February 2010. When President Obama signed the bill into a law on May 22, 2009, he reminded the public about the importance of personal responsibility:

So we’re not going to give people a free pass; we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives.

A similar bill passed the house last year but did not get much further.

Read the current version of the Credit CARD Act of 2009 (formerly Credit Cardholders’ Bill of Rights), H.R.627, as presented by the Congress to the President (May 20, 2009)

The following are older versions of related bills:

Read the Senate’s Credit CARD Act of 2009, S.414 (February 11, 2009)

Read the Senate’s Credit Cardholders’ Bill of Rights, S.235 (January 14, 2009)

U.S. House acts to protect credit card users, Reuters, April 30, 2009


When I write about advocating for the consumer when he or she is in debt, I usually receive a good amount of feedback blaming the consumer for his or her situation. Yes, in many cases, households fall into debt because they buy more things they cannot afford, whether knowingly or unknowingly. In many cases, they ignore their own financial condition without worry for their future or while knowing that a declaration of bankruptcy can save them when life gets rough.

Not everyone falls into these categories, I remind the critics. Medical emergencies are expensive and cannot always be adequately planned for in advance. Credit card debt maybe the only option, or sometimes just a slightly better option that financing your bills directly from the hospital. Here is one example from the New York Times:

Mr. Kupka has multiple sclerosis. The Kupkas, who live in Lindstrom, Minn., have an annual income of $45,000 — a combination of her salary as an office manager and his disability payments. More than 20 percent of that income goes toward health care. Their annual insurance premiums total $5,400, and then there’s the $4,000 Mr. Kupka spends on drugs, doctor’s visits and lab fees before he fulfills his policy’s deductible.

In the three years since Mr. Kupka’s disability forced him to stop working as a mental health therapist, he has accumulated $12,000 in debt. “It’s frustrating,” he says. “We earn too much to qualify for state and county assistance, but not enough to stay ahead of the bills. I’ve thought maybe my wife and I should get divorced. But not only is it against our faith, it turns out it wouldn’t help…” [A]s Mr. Kupka’s situation illustrates, it’s not just uninsured patients who rack up large bills. Nearly two-thirds of those with debt problems… had health insurance.

The article offers tips for dealing with insurmountable medical expenses:

  • Confront, don’t ignore, your situation. If you don’t pay your bills and the hospital decides to use a collection agency, your hardship will increase. Your credit report and credit score will be adversely affected.
  • Review your bills. Health providers make mistakes on bills all the time, but many errors are not caught. Some procedures or services may have several names, identical is everything except price, so it helps to work with a medical expert if you have any questions. You can also resubmit your bills to your insurance company if coverage is denied. If you are still not satisfied, your bills may qualify for a third-party review.
  • Hire an expert. The article suggests working with the Medical Billing Advocates of America to find a qualified mediator to negotiate between yourself and the health care provider.
  • Don’t use a credit card. If you can help it, avoid paying your bill on a credit card if you can’t pay off the balance quickly. Interest charged for your use of someone else’s money will increase your debt. Watch out for credit cards offered by a hospital with immediate approval. These are like store credit cards; they might offer a 0% interest rate up front, but you might fall into a trap and owe much more interest than they’ll tell you when they’re busy saying, “You’re approved!”
  • Don’t let debt collectors take advantage of you. Know your rights for dealing with debt collectors in your state. They may only call you during certain hours, they may not harass you, and they may not threaten you. If they break the rules, you can file a complaint with the Federal Trade Commission.

Situations deteriorate faster if you do not have health insurance. Find a way to get covered if you are not a member of plan yet.


Money Basics: Budgets

This article was written by in Planning. 7 comments.

April is National Financial Literacy Month in the United States. In most cases, schools do not extensively teach financial skills. Teenagers, highly susceptible to messages from the media, often do not have guidance from teachers, who are not trained to teach financial skills, or from parents, many of whom do not model healthy financial behavior. This series of articles at Consumerism Commentary serves to help inspire discussion about basic financial concepts. Please feel free to forward this article to someone who might benefit from a basic financial overview.

Forming a budget is a key to taking control of your finances, and they are best begun when you are young. This is the fourth article in the Money Basics series; so far this series has covered checking accounts, savings accounts, and interest.

I will be the first to admit that I don’t like budgets. My personal approach is to review and adjust my spending rather than create spending limits in advance. However, there was a time in my life that budgeting was necessary, and there was a time that I should have focused on a budget but didn’t.

When I was a teenager, I spent some time visiting one of my friends. He had material desires, like many teenagers, but relied on his parents. Often, his requests were met with a common parental response: “I’d love to help you, but it’s not in our budget.” My impression was not that his parents actually kept a formal budget; this response was just an excuse to curtail the collection of useless things. Regardless of the truth behind the words, a budget came to mean a restriction or limitation designed to eliminate fun and the things we want.

It’s true that budgeting, assigning categories to your expenses and deciding how to focus your spending, is not a fun exercise. And I think those who try to make it artificially fun are missing the point. Like bathing and cleaning your house, it’s just something that needs to be done — at least, at first.

Whether your income is from an allowance, a part-time job, or a full-time job, it’s smart to create your own budget. The point of the budget isn’t to curtail fun, it’s to ensure you have the money for fun when you want it. If chores entitle you to $75 a month, you have $75 to split into categories of spending and savings. If you have no required expenses like car insurance or gasoline, you may decide that $40 could be directed towards savings (a good idea) while the remaining $35 can be used for movies, concerts, or anything else you may enjoy. Savings should be the first part of your budget, and with no expenses you could put at least half your income into savings with the rest available for fun.

Budgeting gets more complicated when you have more responsibilities and therefore more expenses. For example, if you own a car you will need to factor in car insurance, gasoline, maintenance and repairs. Suddenly you are not having fun with the money you earn, or at least, not as much of the money you earn. Unfortunately that’s the stigma of budgeting.

Visualize your budgeting

In today’s world of electronic transactions, debit cards, and online access you your bank, it’s quaint to think about placing cash in envelopes with labels. This is a great way to visualize your budget, however. Start with a set of envelopes labeled “savings,” “car” (or “transportation”), “food,” “rent,” “utilities,” “charity” and “fun.” In each of these envelopes, you will place a portion of the income you receive. If you imagine you receive your income in cash at the beginning of each month, this envelope system makes sense. Start by putting 10% of your income directly in your savings envelope. This is a good habit to fall into early.

Rent and utilities are generally predictable expenses that are roughly the same very month. On day one, when you receive your income, place the exact amount of cash you know you will owe for rent and utilities into the appropriate envelopes. After these set expenses, you can decide how to divvy up your cash.

You know you will need to eat throughout the month, so that might be your next focus. It may be harder to imagine how much money you will need for food without tracking your spending for a time, but make a guess for now. Do the same for your transportation envelope. The remainder can be split between charity and fun, but consider beefing up your savings envelope, too.

Don’t seal the envelopes. You will need to remove the money once your expenses are due, but you are also allowed to transfer money from one envelope to another. Going on a road trip? Transfer some money this month from your savings envelope to the transportation envelope. (If you don’t have enough in the savings envelope, it may be a sign that you’re not ready to go on the road trip.) If you eat less this month, you can transfer some cash from the food envelope to another, such as savings or fun.

For your first budget, use a pencil and paper, even if you don’t use actual cash and envelopes. Look at the numbers and get used to working with them, doing simple calculations to make sure you’re spending less than you’re earning and saving at least 10% of your income. A pencil and paper system is great because it’s practically free and completely customizable.

There are free online tools that help you budget, like Quicken Online and Mint, but their features can be overwhelming if all you want to do is set up initial flexible guidelines for your spending. Software designed specifically for budgeting, like Mvelopes, You Need a Budget, and PearBudget have thorough features, but you must buy the software or pay a monthly fee for its use. And unless you have room for a budget category called “software,” you may want to skip this in favor of the simpler but just as effective pencil and paper.

One excellent option is Personal Capital. It’s free, easy to use, and tracks everything from your budget to retirement investments.

Suggestions for advanced budgeting

Here are a few tips I shared when I wrote about taking control of your finances.

Consider the 60% rule. I’m not a fan of rules, but sometimes a guideline can help get you started on the right path. As an individual, you can decide what’s right for you, but sometimes an example helps. The 60% rule suggests that the first 60% of your gross income (before income taxes are taken out) should be designated for your non-discretionary, essential expenses, like housing, food, clothing, and taxes. The rest of the income should be split with 10% going towards savings, 10% towards retirement, and the rest for “fun,” or your discretionary expenses.

Reward yourself for staying under budget. If your budget is realistic — not too difficult nor too easy to achieve — then you should reward yourself when you spend less than you plan. With your “fun” expenses, your spending may be variable month to month and difficult to predict. If you make a conscientious effort to spend less than you expected, perhaps by seeing fewer movies in the theater or cutting back on vacation plans, you have extra money left in your envelope (virtual or otherwise). First, move that excess money to savings. If you don’t perceive savings to be an intrinsic reward, treat yourself to something you’d like.

Use Capital One 360’s subaccount feature. Since you can split money in ING Direct’s high-yield savings account into separate buckets, you can label these subaccounts to match your budgeting categories. this lets you earn a decent interest rate while keeping your money organized.

Pay yourself first. No matter what, make sure some of your excess income is diverted to your savings. If you set up direct deposit into your checking or savings account, this will require less work. Your savings envelope contains 100% of your income (minus income taxes) after you are paid, and from there you can distribute funds to your remaining envelopes.

(The following tip is new.)

Budgets are not set in stone. Once you have the process down to a science, don’t be afraid to loosen your grip and introduce flexibility. You can borrow from one category to pay for larger expenses in another, and you can borrow from one month to pay for the next. Just don’t get caught into the trap of borrowing from your future.


Starting today, Mint will begin beta testing some significant new features. Mint, a web application that helps you track your financial transactions, account balances, debt and budget, is branching into financial advice. For a few weeks, beta testers will have exclusive access to these new features described below. I have 200 invitations to share with Consumerism Commentary readers who would like to be part of this beta testing group. Keep reading to find out how you can receive an invitation to the beta testing program.

Almost two years ago, Consumerism Commentary contributor Sasha reviewed Mint, freshly minted. As I mentioned at the time, I figured I would not become a regular user of this software. I am a devoted user of Quicken Home and Business, and I am comfortable with my process. When Smithee noticed that had been offering new features earlier this year, I still didn’t pay too much attention.

But I had the chance to speak today with Mint’s CEO Aaron Patzer and experience a preview of the new features the company plans to release to the public in a few weeks. To prepare, I signed into my Mint account for the first time in several months. I was pleasantly surprised to see Mint now supports automatic updates of a variety of investment accounts, loans, and house values, as well offers the option for manual entry accounts for cash expenditures. The charting and reporting functions are much improved.

New features now available for beta testers

Mint wants to get the word out about new additions that take the application’s financial insight and visibility to the next level: action steps to help you improve your financial situation. The developers worked with real, live financial advisers to develop five broad principles for guiding their users towards making healthy financial decisions: knowing your money, spending less than you earn, using debt wisely, investing your savings, and preparing for the unexpected.

A number of tasks are provided for each of these principles, and when you complete these tasks, Mint awards you points. The more points you earn, the higher your score. Mint also explains why each of these tasks is important for a financially fit lifestyle. Here’s what their task suggestions look like:

Mint new features

For each of the tasks, Mint walks you through the decision making process. Based on what Mint knows about your finances — and if you use Mint right, it will know just about everything — the application will provide you suggestions for high-yield savings accounts, even giving you a breakdown of the fees and minimum balance requirements if anything. For optimizing your credit card debt, Mint takes the amount you pay towards your debt each month and tailors its suggestions to your particular spending and payment habits. Based on a few assumptions, Mint explains how much you will save by switching.

It’s true that Mint has a relationship with many banks and credit cards. In other words, if you sign up for a savings account or credit card through Mint, these companies will pay Mint a small fee. According to Aaron Patzer, the choices are presented without preference towards these companies. If the best card for you is the Schwab Bank Invest First Visa Signature Card, it will be listed first, even though Mint may not get paid if you sign up for that particular credit card.

As I mentioned earlier, you receive points for making sound financial decisions. Some examples are surviving a month without being charged bank fees, reviewing your transactions each month, checking your credit report for errors annually, and investing for retirement. The points system is based on a game; you are awarded “trophies” for consistently performing well, a fun incentive for making the right choices.

There is some work to be done. Although the options presented for many of the tasks are personalized, the tasks themselves are only those that would apply to everyone. For example, while health insurance is covered in the fifth principle, life insurance is not. Right now, Mint does not know whether you are someone who would benefit from life insurance. This personalized level of suggestions is not yet possible through Mint. When asked about this, Aaron explained that Mint would not ask participants whether they have dependents, which would help determine more personalized financial advice. They may, however, use home ownership as a trigger; those who own homes are more likely to have dependents and would therefore benefit from life insurance. These enhancements might be developed later.

The competition for online financial management is intense, with Geezeo adding new features frequently as well. I may be too stubborn to discard all that I have done with my desktop software in favor of a web-based application, but as these online applications mature, I’m starting to see the value for people other than financial novices.

How to become a Mint beta tester

I have 200 invitations available for those who would like the chance to enjoy these new features of Mint several weeks before the broader public, and importantly for the software developers, provide feedback and suggestions. Here is all you need to do in order to receive access.

  • If you haven’t already, set up an account at Mint. It’s free and secure.
  • Send an email to [email protected] requesting access and include the email address you use to log into Mint.

In a few days, you will be inducted into the beta testing program and you will receive access to these new features.


Suze Orman Says Stop Paying Off Debt

by Luke Landes

Recently, famous finance guru Suze Orman, who usually doles out sensible advice even if in an disrespectful manner, has advised the public to stop paying off credit card debt any faster than minimum payments allow in order to shore up a savings account that could last eight months in an income emergency. According to this […]

24 comments Read the full article →

Podcast 1: Recession Tips and Shrinking Your Bills

by Luke Landes

It’s finally here! Welcome to the first edition of the Consumerism Commentary Podcast. Today Tom and I discuss tips for surviving financially through an economic and personal recession. The feature, however, is Tom’s interview with Peter Pham, the CEO of price fighting service BillShrink. To listen, use the player above (Adobe Flash required), download the […]

3 comments Read the full article →

Reader Question: How Can My Money Earn More for Me?

by Luke Landes

A reader and friend is looking for some basic financial advice. It just so happens that April is National Financial Literacy Month, so the timing is perfect because I am in a sharing mood. I get to share his situation and my suggestions with Consumerism Commentary readers, and readers have the option of offering their […]

11 comments Read the full article →

New Proposed Regulations for Credit Cards

by Luke Landes

As Smithee mentioned earlier this week, the Congress and the White House are both working to introduce legislation to help consumers and curb deceptive techniques practiced by credit card lenders. Yesterday, a committee of representatives interested in financial issues put forth a bill to the rest of the House, the Credit Cardholders’ Bill of Rights […]

15 comments Read the full article →

Money Basics: Simple Interest, Compound Interest, APR and APY

by Luke Landes

April is National Financial Literacy Month in the United States. In most cases, schools do not extensively teach financial skills. Teenagers, highly susceptible to messages from the media, often do not have guidance from teachers, who are not trained to teach financial skills, or from parents, many of whom do not model healthy financial behavior. […]

4 comments Read the full article →

Money Basics: Savings Accounts

by Luke Landes

April is National Financial Literacy Month in the United States. In most cases, schools do not extensively teach financial skills. Teenagers, highly susceptible to messages from the media, often do not have guidance from teachers, who are not trained to teach financial skills, or from parents, many of whom do not model healthy financial behavior. […]

8 comments Read the full article →
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