With just a day before the August recess, the House Financial Services Committee approved the Credit Cardholder Bill of Rights (H.R. 5244) 39-27. The bill, introduced by Rep. Carolyn Maloney (D-N.Y.), would limit or completely prohibit the most egregious practices employed by credit card companies that have been a thorn in the side of many small businesses. With more and more small businesses relying on credit cards, NSBA has been active in supporting this legislation as a step in the right direction.

Maloney’s bill was one of several considered by the committee during their two-day markup session. At the outset of the debate on H.R. 5233, the committee approved a manager's amendment in the form of a substitute which, while keeping the core provisions the same, amended the bill to bring it more in-line with the recently-proposed rule by the Federal Reserve Board dealing with credit card fairness. The substitute language includes a provision against retroactive interest rate hikes on existing balances, unless the borrower is more than 30 days in arrears on payments.

Because many small and startup businesses lack the assets necessary for traditional bank loans, a recent, nationwide NSBA survey found that 44 percent of small- and mid- sized business owners identified credit cards as a source of financing that their company had used in the previous 12 months—more than any other source of financing. However, more than half of small businesses report that the terms of their credit cards are worsening—not good news for America’s economy, which is heavily reliant on a robust and thriving small-business community.

NSBA applauds the committee on approving this measure and looks forward to working with the full House on passage of this important legislation.