Obama Signs Credit Card Bill

New Rules Say Customers Have To Be More Than 60 Days Behind Before Seeing A Rate Increase

(CBS/ AP)  President Barack Obama warned overeager shoppers and greedy credit card companies alike on Friday to act responsibly as he signed into law a bill designed to protect debt-ridden consumers from surprise charges.

The White House staged a signing ceremony in the Rose Garden, an indication of the legislation's importance to Obama. Though opposed by many financial companies, the bill cleared Congress with broad support.

Obama made clear that he didn't champion the changes with the intention of helping those who buy more than they can afford through "reckless spending or wishful thinking."

"Some get in over their heads by not using their heads," the president said. "I want to be clear: We do not excuse or condone folks who've acted irresponsibly."

And yet, he said, for many of the millions of Americans who use credit cards and carry a balance, trying to get out of debt has been made difficult and bewildering by their credit card companies.

The new law protects consumers from surprise charges, such as over-the-limit fees and costs for paying a bill by phone. It overhauls credit card regulations that the president blames in part for the economic downturn.

"With this bill we're putting in place some common sense reforms," Obama said. "Just as we demand credit card users to act responsibly, we demand that credit card companies act responsibly, too."

Obama did not, however, celebrate a gun amendment included in the legislation. The measure by Sen. Tom Coburn, R-Okla., allows people to bring loaded guns into national parks and wildlife refuges.

The addition of the amendment to the bill and Obama's acceptance of it was viewed as a bitter disappointment for gun-control advocates.

They watched gun-rights supporters gain a victory from a Democratic-controlled Congress and a Democratic president that they couldn't achieve under a Republican Congress and president. Many blamed the National Rifle Association, which pushed hard for the gun law.

The new credit card rules, which would go into effect in nine months, would prohibit companies from giving cards to people under 21 unless they can prove they have the means to pay the debt or a parent or guardian co-signs for the card.

Under the bill, a customer would have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance. Even then, the lender would be required to restore the previous, lower rate if the cardholder pays the minimum balance on time for six months.

Consumers also would have to receive 45 days' notice and an explanation before their interest rates increased.

Last year, the Nilson Report estimated that more than 700 million credit cards were in circulation in the United States. That's more than two cards for every man, woman and child.

Many cardholders are carrying hefty balances. According to the Federal Reserve, the nation is some $2.5 trillion in debt, a figure that does not include home mortgages.

Credit, the president said, has become "less of a lifeline and more of an anchor."

Obama lobbied hard for congressional approval of the legislation, meeting with credit card company executives and discussing the act in a town hall meeting earlier this month.

Some conservatives, however, have expressed reservations about the unintended consequences of the new law. Rep. Scott Garrett (R-N.J.), a member of the House Financial Services Committee, told CBS News last month that it could result in a contraction of credit available, at a time when it is needed the most.

[sajfar]

This is great but does anyone know if this bill addresses the issue of a lender turning a low fixed rate loan into a variable rate loan, therefore exposed to increasing rates dependent on prime? This happened to me on my existing balance where I have never been even a day late. The change left my rate in tact for now, but if prime increases, my rate will also. Anyone have info regarding this?

[rox6416ne]

When the consumer credit protection act was passed in 2008 and given a year before implementation, a precocious 4-year old could've forseen the increased gouging of card carriers. More legislation = more time for card companies to stiff customers = more plummeting of previously pristine credit ratings = less consumer spending. As someone on another thread observed, Chase reported great earnings on its last quarter. Between taxpayer bailout money and hikes on credit card customers' accounts, how could they not?
"All is vanity and a striving after the wind..."

[formrusmcsgt]

Posted by Trust_me_ at 7:29 AM : May 23, 2009

How many times are you going to post this?

[Trust_me_]

Does anyone have any disputes with my numbers here?
any Ideas on how much it cost to eat out every night at the fast foods places?

I quit drinking Soft drinks, Smoking, Dining out, or snacking between meals.
Canceled lawn service,
Canceled cable TV,
Canceled News paper,
Canceled my cell phone
Now make my own coffee!

I felt I just didnt need them any more!

Soft drinks $ 4.00 a day three fountain drinks at Wendys
Smoking $ 5.50 a day One pack a day
Coffee $ 3.00 a day Star bucks
Cell phone $ 1.56 a day $ 47 dollar a month plan
Canceled cable TV $ 2.00 a day $ 60 a month plan
Canceled News paper, $ 1.00 a day local rag
Canceled lawn service $ 5.00 a day $ 35 a week, I miss this one!

I did not include the dinning out or snacking because I could not get a grip on the cost of it!

Total savings $ 22.06 A day $661.8a Month

Now maybe I have been too extreme for most people, but its summer, I am outside more and have lost a total of 23 pounds and saved $1654.5 in 2 and a half months.

[formrusmcsgt]

if you'd use your debit card online you're probalby not the sharpest pencil in the box
Posted by mjvwsr at 7:07 AM : May 23, 2009

Perhaps you're referring to thieves drawing down my account here.....

That I prevent by having a back-up checking account for each of my card accounts (one personal, one for the business) and on-line transfer from the back up accounts to the "card" accounts as needed.

They can only get what I've authorized.

And I pay no fees, annual or otherwise.

[formrusmcsgt]

if you'd use your debit card online you're probalby not the sharpest pencil in the box
Posted by mjvwsr at 7:07 AM : May 23, 2009

And you think there any security advantage using a credit card?

Your pencil doesn't even have a point if you do.

And to make it worse, you pay an annual fee to do so.

Not that sharp at all, are you?

[mjvwsr]

Never heard of a debit card?
Posted by formrusmcsgt

if you'd use your debit card online you're probalby not the sharpest pencil in the box

[formrusmcsgt]

Understand what just happened here - our government just gave free license to the banks to ROB US BLIND legally before they get their hands slapped!
Posted by IrishTouch at 2:18 AM : May 23, 2009

This applies to those foolish enough to borrow and spend other's money because they will not live within their means.

I don't hold for usury.

Nor do I hold with people buying what they can not afford.

[oftencensord]

It seems a peculiar law to me. Especially throwing in the gun provision to get almost a unanimous passage thru the senate and house. That is weird.

The credit card stuff seems unnecessary to me. There is a lot of competition amongst the card companies to get your business. If you don't like your interest rate, then go to a different card. If no other card company will take you because you are unemployed or don't pay your bills, you need a better way out than this law. You need a bail out !

Making parents cosign for minors is going to be a problem for high school grads trying to establish credit for themselves. Young adults are getting the shaft here. They only get a few hundred dollars as a credit limit anyway ! Why single them out as a problem and deny them the opportunity via US Government force !

[realnews12]

Since they have been given the green light to increase interest rates without a cap, what do you think the responsible thing for them to do is? Right, obscene profit for shareholders and CEO's.

Posted by clancy49 at 4:53 AM : May 23, 2009

Obscene profit for shareholders ? Where ? Please tell us which stocks are yielding obscene profits as I'd like to buy some. Somehow, all of my bank stocks have lost 98% of the money I invested in them. And to think, I could have been making "obscene profits" in the stocks you're talking about! Which companies are those ?

[clancy49]

Another question for the masses....What does act responsibly truly mean? In the case of Credit Card Companies, to act responsibly means high and obscene profit for their shareholders. Since they have been given the green light to increase interest rates without a cap, what do you think the responsible thing for them to do is? Right, obscene profit for shareholders and CEO's. Acting responsibly for the consumer means pay those higher interest rates and don't default regardless of anything else in your life, life food, clothing, shelter, or transportation. Of course our children and dogs will no longer get credit cards, but since 90% pay their bills the banks will be feasting on our blood. The 90% of us should work desparately to pay off our cards or bring them down the best we can. Keep the accounts open and charge $10 a month on each card. This will cost the credit card companies more to process than the profit they get from retailers and the billions of interest charges, fee charges, late charges, and now internet charges. We can fight back. Even if you can only pay off one card, do it and charge $10 a month and pay it off every month. That is 90% of us that pay bills. We can hurt them back. We can make a stand. United we Stand, Divided we fall. Do it, and tell all your friends. I can guarantee that our interest rates will hit 50% just like India and we must hurt them first. I can also guarantee that the next bill Congress passes will protect the banks with demanding a minium balance of $500 to a $1,000 or you will have no credit. In the meantime we can hurt them. This time do not sit back and let Congress give them our stolen money from Wall Street.

[eightsigma]

"where was Pelosi, I never seen Obama sign anything without the Queen."
Posted by specialty8 at 4:25 AM : May 23, 2009

Did you have a problem with the Speaker of the House's position on this issue?

[specialty8]

where was Pelosi, I never seen Obama sign anything without the Queen.

[brianbwb-2009]

"I am sure this new credit card law will help those masses of people who are hopelessly over their heads in credit card debt, but it should prevent those customers like me, who pay off their balance every month, so as to avoid finance charges, from using our credit cards to purchase online. This new law seems so unfair to the folks who pay their bills on time every month and want to purchase items online instead of driving to the local stores and pay with cash.'" Posted by ricklf1

One of the provisions says that rates cannot be raised on people unless they are more than two months behind, so how does that help those "over their heads"? If they are is such straits, they will, by definition, fall more than two months late, and will thus incur even higher rates.

As far as the companies instituting "instant interest", that is not a provision mandated by this law, it is their own decision, and they will only cite this bill as an excuse for what they are going to do sooner than later anyway.

I say boycott credit cards, (I personally have never used them, such diverse thinkers as Ben Franklin and Marcus Garvey called credit the first step back to slavery, and I found their reasoning perfectly logical) and use a debit card for online purchases, surely the online companies will adjust to this new condition, or they will lose the sales.

"Rep. Scott Garrett (R-N.J.), a member of the House Financial Services Committee, told CBS News last month that it could result in a contraction of credit available, at a time when it is needed the most."

This neo seems to think that increasing debt is needed, my how the neos have suddenly become "liberal" when it comes to letting heir cronies continue to rip off the people.

[IrishTouch]

Formrus: How does this new law "help those who are in debt?" If anything, this law will create more of those just "eeking" by to default and file bankruptcy because they won't be able to pay even their monthly payments anymore due in part because of the massive increase in their interest rates for the next year. Understand what just happened here - our government just gave free license to the banks to ROB US BLIND legally before they get their hands slapped! If Congress and our President really wanted to "protect us," this law would be effective TODAY - not a year from now. This "protection" we now have is going to cost us MILLIONS, if not BILLIONS, in the next year - is that worth it?

[IrishTouch]

Good job Congress"?????? Are you kidding me????? A GOOD JOB would have been for Congress to pass this bill and have it go into effect TODAY - not over a year from now (July, 2010)!!!! Obama just opened the floodgates for the banks and they can now double, triple, quadruple their interests rates not only on new purchases, but any existing balances you had, decrease your limits as low as they choose (even below your current existing balance) and then charge you for overextending your balance, and start implementing monthly maintenence fees if they so desired. DO THE MATH and you'd be ASTOUNDED as to how much more money these banks will STEAL from the American people for OVER A YEAR before this law goes into effect. THIS LAW SHOULD BE IN EFFECT TODAY - NOT JULY, 2010. CONGRESS JUST SET US ALL UP TO BE FINANCIALLY VICTIMIZED FOR A ONE-YEAR PERIOD!!!! WAKE the F*** UP - MILLIONS, if not, BILLIONS will be made by the banks in the coming year because of this law - ALL AT YOUR EXPENSE!!!!! The ONLY recourse Americans have for the next year is to CANCEL ALL OF YOUR CREDIT CARDS - let them take in SH** for the next year. "GOOD JOB" MY ARSE! A "GOOD JOB" would have this law go into effect IMMEDIATELY!!!!! So who in Congress "owed" banks a favor? This one-year waiting period is devastatingly incomprehensible!

[formrusmcsgt]

I am sure this new credit card law will help those masses of people who are hopelessly over their heads in credit card debt, but it should prevent those customers like me, who pay off their balance every month, so as to avoid finance charges, from using our credit cards to purchase online.
Posted by ricklf1 at 12:20 AM : May 23, 2009

Never heard of a debit card?

[formrusmcsgt]

"With this bill we're putting in place some common sense reforms," Obama said. "Just as we demand credit card users to act responsibly, we demand that credit card companies act responsibly, too."
-----
How can spending money you haven't even earned yet be considered "responsible"?

Borrowing other's money to spend because you haven't any can hardly be considered to be "responsible" by any means.....

[ricklf1]

If I have to pay interest on all my purchases using a credit card from the moment I purchase the item, rather than having the 25 day grace period to pay off the bill without adding interest charges, why use any credit card? I am sure this new credit card law will help those masses of people who are hopelessly over their heads in credit card debt, but it should prevent those customers like me, who pay off their balance every month, so as to avoid finance charges, from using our credit cards to purchase online. This new law seems so unfair to the folks who pay their bills on time every month and want to purchase items online instead of driving to the local stores and pay with cash.

[Trust_me_]

Does anyone have any disputes with my numbers here?
any Ideas on how much it cost to eat out every night at the fast foods places?

I quit drinking Soft drinks, Smoking, Dining out, or snacking between meals.
Canceled lawn service,
Canceled cable TV,
Canceled News paper,
Canceled my cell phone
Now make my own coffee!

I felt I just didnt need them any more!

Soft drinks $ 4.00 a day three fountain drinks at Wendys
Smoking $ 5.50 a day One pack a day
Coffee $ 3.00 a day Star bucks
Cell phone $ 1.56 a day $ 47 dollar a month plan
Canceled cable TV $ 2.00 a day $ 60 a month plan
Canceled News paper, $ 1.00 a day local rag
Canceled lawn service $ 5.00 a day $ 35 a week, I miss this one!

I did not include the dinning out or snacking because I could not get a grip on the cost of it!

Total savings $ 22.06 A day $661.8a Month

Now maybe I have been too extreme for most people, but its summer, I am outside more and have lost a total of 23 pounds and saved $1654.5 in 2 and a half months.