House Passes Bill To Aid Credit Card Users

Measure To Rein In Sudden Increases In Interest Rates, Late Fees

(AP)  Riding a crest of populist anger, the House on Thursday approved a bill to restrict credit card practices and eliminate sudden increases in interest rates and late fees that have entangled millions of consumers.

The legislation passed by a bipartisan vote of 357-70 following lobbying by President Barack Obama and members of his administration.

The measure would prohibit so-called double-cycle billing and retroactive rate hikes and would prevent companies from giving credit cards to anyone under 18.

If they become law, the new measures won't take effect for a year, except for a requirement that customers get 45 days' notice before their interest rates are increased. That would take effect in 90 days.

Similar legislation is before the Senate, where its prospects appear promising.

Consumer advocates and some Democrats have unsuccessfully sought for years to bring new rules to the industry.

"A big vote in the House will create an even bigger momentum as it goes to the Senate," House Speaker Nancy Pelosi told reporters.

Supporters want to get a final congressional package to Obama's desk by the Memorial Day holiday.

Before approving the bill, dubbed the Credit Card Holders' Bill of Rights, the House adopted a series of amendments - some of which were pushed by the White House - that amplified the restrictions on industry practices.

The House measure incorporates Federal Reserve regulations due to take effect in July 2010 but goes further by adding restrictions for credit cards for college students.

Double-cycle billing eliminates the interest-free period for consumers who move from paying the full balance monthly to carrying a balance.

Opponents tried vainly on the House floor to temper a fast-moving bill with amendments that would have given credit card issuers some openings to raise rates within the proposed restraints.

"We shouldn't take credit opportunities away," said Rep. Jeb Hensarling, R-Texas. "I just want consumers to have choices. I want there to be a competitive marketplace."

Hensarling and other Republican opponents endorsed the bill's requirements for clearer disclosure in the fine print of credit card agreements. But they said the legislation overall could prompt lenders to restrict credit in an already tight market to compensate for the new requirements.

That's the leading argument made by banking industry executives against the legislation.

Supporters of the bill also drew on the economic crisis to make their case.

"Americans deserve a fair shake," said Ed Perlmutter, D-Colo. The credit card industry "has taken advantage of millions of vulnerable Americans."

Rep. Carolyn Maloney, D-N.Y., the bill's chief sponsor, said the changes were needed because "many people are turning to their credit cards because they have lost their jobs."

Boosters of the bill are tapping into rising public anger over corporate excesses and the conduct of banks and other companies receiving billions of dollars in taxpayer money.

"At a time when millions of families continue to struggle to make ends meet, additional safeguards are needed to ensure consumers are not being saddled by questionable industry practices," the powerful AARP, the lobbying group representing seniors, said in a statement supporting the bill.

Obama met at the White House last week with executives of the credit card industry and made clear he wants to sign a bill into law. He reaffirmed it as a priority at his prime-time news conference Wednesday evening, saying legislation was a must to protect consumers from "abusive fees and penalties."

Earlier Wednesday, Maloney and Treasury Secretary Timothy Geithner met with representatives of consumer and civil rights groups to discuss the credit card overhaul.

The administration is advocating stricter practices that could crimp banks' revenue at the same time the government is shoring up the financial institutions with hundreds of billions of dollars in bailout aid.

The credit card changes could cost the banking industry more than $10 billion a year in interest payments, according to a study by the law firm Morrison & Foerster.

Amid the recession and rising job losses, consumers - even those with strong credit records - have been defaulting at high levels on their credit cards. Banks already battered by the mortgage and credit crises have been bleeding tens of billions in red ink from the losses.

U.S. credit card debt has jumped 25 percent in the past 10 years, reaching $963 billion in January, according to figures from the White House. The average outstanding credit card debt for households that have a card was $10,679 at the end of 2008, according to CreditCard.com, an online market.

[jxknowles]

Another clear victory for the American people and the majority of Congress. Credit cards are a dangerous game to play financially. They can have the same effect on people as slot machines. There had to be fairness and protection from the credit card pushers. It was about time.

I applaud President Obama, as well Bush, for their efforts to protect citizens from these vultures.

[novamba]

evilbushevicks,
Filibuster is a tool of the minority in our senate, not the HOR. The article is about passing this in the HOR. The Dems had 2 years of ownership in the house, and this never came up. Trust me, I hold no more love for the GOP than I do for the Democrats, and in my opinion, this is a watered down version of nothing. Please let me know your thoughts as to why the majority of these changes would take effect in a year and not tomorrow.

[drputt45]

HEY! Somebody close the barn door! Too late, the horses are already out.

If they don't make this retroactive, its not much help. Most folks have been living off credit cards and pension crumbs for a while now. MC just announced a nice big profit based on higher fees. The poor just keep on getting poorer.

[novamba]

Naturaltwo, I see your displeasure with this situation, but in reality, it is all in the fine print they send you when the pretty credit card arrives. Most people cannot open the envelope fast enough, and spend more time removing that gooey substance in the back of the card used to glue it to the letter, than actually reading the terms of the contractual obligation they have just entered. That Marine is right, dont spend money you dont yet have, and you'll be okay.

[nursehopeny]

It would be wonderful if the government didn't have to step in to control the financial exploitation in this country. We need stricter controls because these greedy companies run by greedy people refuse to control themselves. It's the same with laws which are meant to control rape, murder, theft. It would be nice if people could just self-regulate....but it's not going to happen....they need control!

[jtdev1]

I'm sure they built in pleanty of loop-holes...

This bill will be watered down so much prior to going in effect it will be totally toothless and worthless.

Do you really think anything changed in washington? Our Congress needs to be fired.

[novamba]

BeckieBest,
I like your optimistic look on life after Bush. Its actually quite cute.
Now on to the matter at hand:
In the House of Representatives, you have no filibuster, so a supermajority is not needed to get this type of legislation accross, even if it is only done so to make a point. A simple majority vote would have done, which the House did have. When you blame republicans, do you remember that it was democrats that blocked the oversight of Freddie Mack that wouls have helped avert in great part the current economic situation? I do not like either party because to me they are both one and the same. Its like calling a pig a swine or pork. They take money from the same people, and have the same end goal. They just take turns at the helm.

[BeckieBest]

novamba



The Democrats did not have enough of a majority to overcome Republican obstructionism in Congress and or a guaranteed Bush veto.

Their hands have been tied until now.

Now we have a Congress that is actually doing something for the citizens of this country for a change.

[BeckieBest]

And who was against this bill?


Republicans.


They always take the side of those who want to bleed consumers.

[naturaltwo]

This is for that idiot marine who thinks that it is okay to say one thing and do another. An agreement is an agreement and should not be subject to the whim of one of the parties to change it whenever they want.

And it is not okay to prey on the elderly and take advantage of diminished capacity to steal their homes from them.

And it is not okay for soldiers to rape women soldiers, so take your better than thou attitude and shove it where the sun don't shine.

[novamba]

Johnsonvols, to answer your question as to why Bush didn't do this, it is congress that does this, and last I checked, the Democrats had a majority in the house during Bush's last administration. Why didnt the House take this up a year ago? because it was election year and these crooks were not going to bite the hand that feeds them on an election year. Our entire congress should be playing golf or watching tv at home. People blame presidents and forget who controls laws and most importantly, our tax payer dollars.

[displeased]

The card was paid off within a week, Its destined for the shredder. Its amazing how much money you have when you don't have a credit card.
Posted by kcits

I agree. I've been cash basis for 3 years now. If I want something, I save for it before I buy. The pay off has been more money in my pocket.

[novamba]

The reason this will take a year to take effect is that most of the affected companies funded the lavish parties at the respective conventions, and as a reward, they get a year to figure out a way to stick it to us while circumventing the law. People, dump your credit cards. Use a check card. If you have to put it on a credit card you dont intend to pay off at the end of the month, YOU CAN"T AFFORD IT. Want relief? quit paying your cc bills, and settle for half in 6 months, then start over without credit cards.

[BeckieBest]

Republicans only passed laws that let credit card companies screww consumers.


What a difference a little regime change makes.

[slantedview]

Until it hit the middle class, the government wasn't all that concerned for the working class poor paying high interest rates, living paycheck to paycheck, struggling to feed their kids, huh. It was ok if we paid higher rates on everything because we obviously weren't trying hard enough or working as many hours as we needed to.

Now all of a sudden it's not ok because the middle class is struggling to make ends meet and the rich people are losing money... and we all know they're doing everything they're suppose to be doing, right? Please... the bailout is a double standand. Now that the credit card companies are ripping off the middle class, the government steps in.

At least I'm not stupid enough to have any credit cards.

[budmag06]

A year???

[tincup356]

Why can't these "rule changes" go into effect immediately, like the jump in interest rates did? How is it that one side (the banks and credit card companies) can change the agreements at the drop of a hat and our Congress needs a year to demand an adjustment in this "loan shark" crime wave?
Posted by excoachken at 4:48 AM : May 1, 2009 ........................................
Maybe you didn't pay lobby payments as big as the banks did.....get real fellow ....do you really think the government is going to do anything to favor you over their lobby robbery buddies?........if you do you have had too much political kool aid.The truth of the matter is that NEITHER party represents you,,,,they have already been bought and paid for by those same people who pay the lobby dollars,and STEAL representation from the people.

[hungry1968-15]

Apparently, being in hock up to your eyeballs brings out a certain hostility towards lenders, eh? As if they nailed your foot to the floor until you agreed to borrow their money because you don't have any.

Absurd.
Posted by formrusmcsgt at 4:10 AM : May 1, 2009





While I do agree with your POV, there is NO WAY that these predators, and that is what they are, should be able to screw anyone, anytime they want.

Myself and my girlfriend keep credit cards for emergencies - just in case. She had a balance of $400 on hers. She went to Sears, where they had a promotion where you could get 10% of your order, if you applied for a Sears card and put your purchase on it, so she did her intent being to pay the bill off completely when it came in, and cancel the Sears card.

Two weeks later, here comes her bill from Bank of America for the $400 credit card - with a 27.99% rate!!

When she called to ask why it was raised, they said that it was because her credit score had changed. The change to her credit score? Applying for, and being approved for the Sears card!!

So she paid off both, and canceled both, but they still were able to screw her for that one billing cycle. But what if she didn't have the money to pay it off?


F these mega banks!! They should ALL be broken down using federal anti-trust regulations!!

[excoachken]

Why can't these "rule changes" go into effect immediately, like the jump in interest rates did? How is it that one side (the banks and credit card companies) can change the agreements at the drop of a hat and our Congress needs a year to demand an adjustment in this "loan shark" crime wave?

[kcits]

After a long time and a lot of work, I no longer have a credit card. At one time I had 5. The last one has been replaced with a debit card. The last straw was when a card I had paid on time for over 2 years, I was late once. They charged me a $25 late fee, then tripled my interest rate. The card was paid off within a week, Its destined for the shredder. Its amazing how much money you have when you don't have a credit card.