Major credit card reform is underway on two fronts.
We will need your help soon.

A key Congressional House committee recently passed a bill to significantly change how credit card companies do business. These changes will help consumers stung by sudden interest rate increases and high card fees, as well as provide other important protections for cardholders.

Congress returns from break in September, and we'll be asking you to put the pressure on to get legislation passed.

Why? The Federal Reserve Board also has proposed major reforms to credit card company practices, but they are not a sure thing- they could be significantly weakened or delayed indefinitely. In fact, another banking regulator, the OCC has been urging the Fed to water the rule down. Passing a bill in Congress this year will help ensure reforms are put in place, and give all of us a break from out-of-nowhere interest rate hikes, excessive fees and late charges.

In the meantime, thank you for sending in more than 56,000 comments to the Federal Reserve Board in support of the new proposed rule. The agency is reviewing all comments, and we'll let you know what final reforms they issue in December. You can check out what CU thinks of the proposal at the bottom of this page.

The legislation in Congress complements the Fed rules, and reforms proposed in both include:

• Restricting card companies from hiking your interest rate on existing balances if you haven't been more than 30 days late paying.
  
• More fairly distribute your payments to higher-interest debt. This help ends the unfair practice of preventing you from paying down high-interest balances until you've paid off low-interest ones first.
  
• Giving you at least 21 days from the billing date to your payment due date, preventing costly late fees.
  
• Ending two-cycle billing, in which a finance charge is calculated based in part on balances you've already paid.
  
• Ending over-limit fees caused by a card company's hold on your available credit. You shouldn't suffer because a company holds your credit and causes you to go over the limit.

Some ways the legislation goes farther than the Fed rule:

• Prohibits "universal default" - when companies raise interest rates on cardholders because of behavior related to their other bills, even though they are in good standing with the card in question.
• Requires cardholders to be given 45-day notice of any rate increase on an account.
• Allows the customer a fixed ceiling on their credit card limit so they would not incur over-the-limit charges.
• Prohibits the issuance of credit cards to children without an adult co-signer.

Consumers Union is urging the Fed to do more to level the playing field, including:

• Limiting "penalty" high-interest rates, and how long card companies can keep you at these extremely high rates.
  
• Prohibiting fees for paying a credit card by phone or Internet.
  
• Ending random changes in interest rates for future purchases "at any time for any reason."
  
• Prohibiting account-opening fees no more than 10 percent of the credit limit. Multiple over-limit fees also should be banned during a single billing cycle.
  
• Ending ALL over-limit fees when it's the card company's fault. You shouldn't be penalized when the company approves a transaction, or charges you fees, that put you over your credit limit.