Watch CBSN Live

Credit Card Reform Bill Goes To Obama

Congress on Wednesday sent President Barack Obama a bill with sweeping new rules for the credit card industry that will affect just about every American.

The House voted 361-64 for the bill on Wednesday. The Senate had already approved the measure by a 90-5 vote on Tuesday.

The new restrictions will protect debt-ridden consumers from many of the surprise charges common in the industry, like over-the-limit fees and a charge to pay the bill by phone. People under 21 also will find it difficult to get a card.

As banks scramble to make up for the lost revenue, cardholders who pay off their balance in full each month could see annual fees become the norm and lucrative rewards programs canceled. Companies could also begin charging interest immediately on purchases instead of offering grace periods.

"Many Americans depend on credit cards to get by in this economy, and today they have won a giant victory that ensures they are protected from practices that would drive them further into debt, while also making our economy stronger," said Sen. Christopher Dodd, D-Conn., chairman of the Banking Committee.

Some of the changes, including a requirement that cardholders receive 45-days' notice before their rates are raised, are already on track to take effect in July 2010 under new regulations by the Federal Reserve. But the legislation would put these changes into law and go further in restricting when and how banks charge people and who could get a card.

For example, the bill would require people under 21 to prove first that they can repay the money or that a parent or guardian is willing to pay off their debt if they default.

And consumers who see their interest rate skyrocket because they have been late on a payment would get a chance at their older, lower rate if they pay their bill on time each month for six months.

White House spokesman Robert Gibbs said Mr. Obama looked forward to signing the bill as quickly as possible.

"Obviously this has been something that the president has championed, that the president believes is important to protect consumers," Gibbs told reporters Wednesday. "This is important for people that are represented in this town but don't have a lobbyist. These are important reforms to protect consumers and to bring some commonsense rationality to our financial system."

Once the president signs the bill, the law won't fully take effect for nine months, as CBS News business correspondent Anthony Mason reports. Consumer groups are concerned the credit card companies will use the time to hike up interest rates and fees while they can.

And the bill was not a total loss for the credit card companies, who "killed two proposals to impose caps of 15 percent and 36 percent annual percentage rate on credit cards and other loans," as CBS News investigative producer Laura Strickler reports.