Bill would regulate cards, overdraft fees

PROVIDENCE – Sen. James C. Sheehan, D-Narragansett, has introduced legislation that would more closely regulate the credit-card industry and limit the amount of bank overdraft fees.
One Sheehan-sponsored bill – S 0500 – would prohibit banks and credit unions from charging fees for overdrafts of less than $10. The measure would also limit banks to three overdraft fees per day on an individual’s accounts, unless the total overdraft exceeds $100.
The same bill would require that banks and credit unions allow customers to “opt-in” to a program whereby credit card transactions would be processed chronologically, not largest to smallest.
“Overdraft fees may never be eliminated, but consumers do need protection from excessive and what I would consider unfair fees that place them further and further into debt,” Sheehan said. “This is particularly urgent as many people are struggling in this recession and cannot afford to pay these exorbitant fines.”
Another measure submitted by Sheehan – S 0499 – would set interest-rate caps on credit-card debt. Currently, there are no limits.
The bill would amend existing statutes that exempt credit companies from the same level of regulation as other financial institutions. Under Sheehan’s measure credit-card companies would not be permitted to charge an interest rate higher than 21 percent each year, or 9 percent above the domestic prime rate.
“For too long credit-card companies have gotten away with charging high interest rates that fit within the textbook definition of usury,” Sheehan said. “Now is the time for these unfair unethical practices to fit the legal definition of usury and for Rhode Island government to take a stand against it.”
The Sheehan bills are co-sponsored by Sen. Roger A. Picard, D-Cumberland; Sen. Paul V. Jabour, D-Providence; Sen. Elizabeth A. Crowley, D-Central Falls; and Sen. Louis P. DiPalma, D-Little Compton. The bills have been referred to the Senate Corporations Committee.