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Date May 12, 2009

Town Hall Discussion on Credit Card Issues on the Way

Town Hall Discussion on Credit Card Issues on the WayAs the credit card crisis continues, the White House is once again flexing its influence to confront the issue affecting a large majority of American citizens. This time, President Barack Obama plans to hold a town hall meeting during a planned stop in New Mexico on May 14. The President plans to open discussions on the credit card crisis during the meeting and to push for the passage of the credit card reform bill in Congress.

Robert Gibbs, press secretary of the White House, expressed to reporters the administration’s “strong desire to get something done on an issue of tremendous importance to middle class families and that is to rein in some of the excesses and some of the abuses that we’ve seen from credit cards over the past many years”.

Gibbs further elaborated on the administration’s stance saying, “For many people, credit cards provide an opportunity to finance purchases, but we think there’s a more equitable way to do that. Those reforms are on their way through Congress.”

The White House press release came as cardholders were reeling after the effects of the sudden interest rate increases and banking fees that came to effect last year and earlier this year. Rate hikes and card fees became the norm as banks struggled to keep afloat while the economic crisis continued. Unfortunately, cardholders were ill prepared for the sudden interest and fee increases, having to contend with a failing job market and a drop in the property markets.

The first signs of the changes on credit card legislation were first seen in the  new federal rules which were set to become effective on July 1, 2010. Earlier this year, the credit card crisis got some much needed attention from President Barrack Obama and a bill arrived in the House of Representatives early this year.

The credit card amendment has already passed through the lower house and is currently going through deliberations in the U.S. Senate. It passed through the House of Representatives late in the month of April and was known as the Credit Cardholders’ Bill of Rights. The passage was by an overwhelming vote of 357 to 70.

In the U.S. Senate, the bill is sponsored by Senator Christopher Dodd and Senator Richard Shelby, who is Dodd’s GOP counterpart. The Senate bill has been named as The Credit Card Accountability, Responsibility, and Disclosure Act or the Credit CARD Act. The bill is supposed to be a tougher version of what the House of Representatives recently passed.

As the bill continues to be deliberated in the senate, President Obama’s town hall discussion is calculated to boost support for it and, at the same time, inform the public on what the bill entails and what it will mean for the American cardholder.

Date April 30, 2009

Credit Card Bill Passed By U.S. House Of Representatives

Consumers angry and frustrated by the tactics recently employed by credit card issuers can find some comfort knowing relief is on the way. Today the House voted 357 to 70 in support of the Credit Cardholders’ Bill of Rights. Lawmakers are in favor of legislation which protects credit card users from sudden hikes in interest rates, hidden fees and unfair billing practices.house-of-representatives

The House adopted a series of amendments before passing the bill. One amendment would require credit card issuers to warn card holders who are close to exceeding their credit limits while another requires maintaining low introductory rates for at least six months. Incorporating Federal Reserve regulations which take effect in 2010 the House went a step further by adding restrictions for credit cards for students.

President Obama backs efforts to make changes in an industry that has recently increased what some people consider abusive, manipulative and unethical billing practices. Supporters hope to have legislation signed into law by late May after the Senate considers its own version next week. If signed into law legislation would be implemented within 90 days.

Banks who are already reeling from the mortgage crisis and the rising level of defaults have objected to legislation regulating the industry claiming it will only result in higher interest rates for all consumers and fewer chances of obtaining credit.

Some of the issues covered by the Credit Cardholders’ Bill of Rights include:

  • Requires credit card companies to give 45 days notice of intended increases in interest rates. This give the consumer the opportunity to either pay off the balance or look for other opportunities for financing.
  • Protects responsible cardholders who pay on time from being penalized unfairly.
  • Prevents card companies from increasing rates unfairly on existing balances.
  • Allows cardholders to set limits on their credit card accounts.
  • Requires credit card companies to allocate payments to higher interest balances or distribute the payment evenly to balances with different interest rates. Presently credit card companies apply payments toward low interest balances allowing higher interest balance to continue to grow.
  • Stops double cycle billing where card companies charge interest on debt consumers have paid on time.
  • Prohibits imposing excessive fees to cardholders.