House passes credit card bill that helps consumers

[Neil D]

WASHINGTON – 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.

___

House bill: H.R.627

Senate bill: S.235

[carolaa]

It's long overdue.

[Liz]

The only good credit card, is one that is cut up.

[bonnie]

HEY NEIL D

WELL in 1 year we can be thankful

dgrimm60

Another government move to save people from themselves. Were the credit card companies doing anything illegal?

Didn't read it all so am wondering if it makes it easier for people to run up debt and not pay in the end??

[Neil D]

Another government move to save people from themselves. Were the credit card companies doing anything illegal?

Didn't read it all so am wondering if it makes it easier for people to run up debt and not pay in the end??

I dunno....you tell me...Is a interest rate as high as 29% on good regular on time payment customer illegal?

.... Well, SOMEBODY has to pay for that bailout that they took......

[bonnie]

Originally Posted By: bonnie

Another government move to save people from themselves. Were the credit card companies doing anything illegal?

Didn't read it all so am wondering if it makes it easier for people to run up debt and not pay in the end??

I dunno....you tell me...Is a interest rate as high as 29% on good regular on time payment customer illegal?

.... Well, SOMEBODY has to pay for that bailout that they took......

Why would someone apply for a credit card and not read the fine print?

I guess if someone is dumb enough to apply for and get a credit card that changes 29% on a good credit rating someone wasn't tending to business.

Yes, someone will pay for all the bailouts and that someone is us

[Neil D]

Again, you are under the wrong impression....these are established customer who have not missed/nor been late with thier payment....and the interest rate that they shopped for was the best that they got at the time they applied a few years ago. Now, the interest rates are being changed for no reason on thier part....Sort of a betrayal of old agreement....

[bonnie]

Again, you are under the wrong impression....these are established customer who have not missed/nor been late with thier payment....and the interest rate that they shopped for was the best that they got at the time they applied a few years ago. Now, the interest rates are being changed for no reason on thier part....Sort of a betrayal of old agreement....

Why does a credit card company have to have a reason to hike interest rates. If there is not a express statement that they would not raise rates is it illegal for them to do so.

I don't use credit cards but at one time I had one and it seems to me that if you read thru all the jargon it spoke of raising rates at the descretion of the credit card company.

That would be a good signal to cut it up and close account.

Regular use of credit cards and not paying the balance every month when you do is what gets most into trouble.

If you cannot pay for it don't charge it

[Dr. Shane]

This is way overdue. I am glad this is being done. President Obama gets a big for this one.

The need to pass a law about banks accounting practices on posting checks too. When checks come in the banks always post the largest first. So if I have a balance of $50 and three checks come in: one for $65, one for $15, and one for $10, they will post the $65 check first so they can charge me three overdraft fees. If the law required them to post the smallest first it would mean I would only get charged one overdraft fee. It is simply accounting rules.

[Woody]

Quote:

I don't use credit cards

You ALWAYS need to use Master Card. See my new thread regarding this. It may save you much grief.

[bonnie]

Quote:

I don't use credit cards

You ALWAYS need to use Master Card. See my new thread regarding this. It may save you much grief.

No I don't use any credit card. That was I know at the end of the month I don't have to sweat paying for what I charged.

[Woody]

Just keep track of what you charge. Have some good book keeping.

[Dr. Shane]

The borrower is slave to the lender. I choose not to be a slave. I like freedom.

[Woody]

No need to borrow. Just pay your bills each month.

[Planey]

No I don't use any credit card. That was I know at the end of the month I don't have to sweat paying for what I charged.

This sounds like a very wise policy.

However, getting a debit card gives you the convenience of being able to payeasily and without having to carry large(ish) sums of money around. I find my card to be very useful.

Perhaps you could give some thought to getting one of those.

Graeme

[bonnie]

Originally Posted By: bonnie

No I don't use any credit card. That was I know at the end of the month I don't have to sweat paying for what I charged.

This sounds like a very wise policy.

However, getting a debit card gives you the convenience of being able to payeasily and without having to carry large(ish) sums of money around. I find my card to be very useful.

Perhaps you could give some thought to getting one of those.

Graeme

I use a debit card routinely. Have for years,I rarely write checks

[Neil D]

This sounds like a very wise policy.

However, getting a debit card gives you the convenience of being able to payeasily and without having to carry large(ish) sums of money around. I find my card to be very useful.

Perhaps you could give some thought to getting one of those.

Graeme

I am not sure about Oz, but here in the states, if we have cards that can be used as both debit or credit cards. If we use it as a credit card, and our card is stolen, the most that can be charged on it is $50 [or is it $100]. However, if it is used as a debit card and it is stolen and used, we are libal for the whole amount used on it...even if it exceeds our balances...

....fine print...

[phkrause]

pk

[Dr. Shane]

However, if it is used as a debit card and it is stolen and used, we are libal for the whole amount used on it...even if it exceeds our balances...

....fine print...

I lost a debit card and canceled it immediately. I had to close the account, open a new account, and transfer all my funds to it. It was not used for a number of months later. It was a big hassle but I was not held responsible for any of the purchases.

[Dr. Shane]

No need to borrow. Just pay your bills each month.

Using a credit card is borrowing, even if the balance is paid each month. If a person is going to use a credit card, after they make a purchase, they need to go home and pay the card off online the same day. If they carry a balance more than a day, they are borrowing money and are slave to the lender as long as there is a balance.

[Woody]

Do you pay for your electricity daily?

I used to but it got a little annoying.

[Dr. Shane]

I don't pay interest on my electrical bill and my electrical provider isn't looking for me to make a mistake so they can slap me with fees and penalties.

Our conference stewardship director is the person I heard instruct us to pay our credit card bill the same day we use it if we are going to have a credit card. That makes complete sense. Since the borrower IS slave to the lender, why would anyone want to wait to pay the bill? And being good stewards of our money, we shouldn't be spending money we don't have. And if we have it, why not pay the bill?

[bonnie]

Most of the time people find themselves in financial trouble it could have been prevented. Hindsite is always 20-20.

Barring illness or a real crisis of some kind we can usually look to ourselves as to where the problem started and with a little diligence can prevent same in the future.

Money you spend that is not yours yet will eventually get most of us

[Woody]

I don't pay interest on my electrical bill and my electrical provider isn't looking for me to make a mistake so they can slap me with fees and penalties.

Our conference stewardship director is the person I heard instruct us to pay our credit card bill the same day we use it if we are going to have a credit card. That makes complete sense. Since the borrower IS slave to the lender, why would anyone want to wait to pay the bill? And being good stewards of our money, we shouldn't be spending money we don't have. And if we have it, why not pay the bill?

Most electrical companies do slap on late fees and interest if you don't pay on time. They are not much different than a credit card in this regard.

[Dr. Shane]

Wrong. Electric providers do not depend on late fees to pay dividends to their stock holders. If every electrical customer paid their bill on time the electrical providers would still be highly profitable operations. The same cannot be said of credit card companies. Credit card companies depend on their customers paying interest, fees and penalties.