This afternoon, the Senate passed legislation imposing restrictions on the credit card industry. Known as the Credit Cardholders' Bill of Rights Act of 2009, the bill (HR 627) was approved by the Senate 90-5.

Like the measure passed by the House, the bill requires that credit card companies provide notice to customers of interest rate increases 45 days prior to such increases and requires credit card companies to mail customer bills 21 days prior to the due date. As in the House version of the bill, the measure approved by the Senate prohibits issuers from charging fees based on the method of payment. The Senate version specifically prohibits fees based on payments made by mail, phone, electronic transfer or online, except for expedited payments. Also like the House version, the proposed Senate bill imposes heightened restrictions on college student credit offerings. The Senate version specifically includes a requirement that a company must obtain a parent’s signature agreeing to take responsibility for any debt incurred by a credit card holder under the age of 21.

The Senate version of the bill differs in certain respects from the House version. The Senate version permits credit card companies to increase interest rates on customers only after 60 days of payment delinquency, rather than the 30 day period contained in the House version of the bill. The bill also mandates that credit card companies review interest rates periodically and lower interest rates if a customer improves his or her payment history. The Senate version imposes restrictions on gift cards, including a mandate that all gift cards have at least a five-year life; the House version does not contain any gift card-specific provisions. Perhaps most controversial of the amendments included in the Senate version is a provision introduced by Senator Tom Coburn (R-OK) permitting firearms in national parks where permitted by state law.

The legislation would require credit card companies to comply with the new requirements within nine months of enactment. President Barack Obama has committed to sign the bill by Memorial Day, which would result in a compliance date of late February 2010. The House is expected to vote on the amended version of HR 627 as early as Wednesday, May 20.