Friday, April 24
Posted 8 a.m. EST
Bankrate reporter Leslie McFadden contributed this entry.
Credit cardholders fed up with arbitrary changes to their rates and terms have a key backer on their side -- the president.
Yesterday afternoon President Barack Obama convened with executives of top credit card issuers to discuss abusive practices in the industry. In a press conference following the meeting, he told reporters his administration would press for reform.
"I think it's important that we get input from the credit card issuers as we shape this reform, and I'm going to leave it up to my economic team to work with Congress to evaluate all the various proposals and to get some very definitive language in place," he said.
President Barack Obama laid out consumer protections he wants to see included in legislation:
- A prohibition on unfair rate hikes, abusive fees and penalties. "The days of 'anytime, any reason' rate hikes and free traps have to end," he said.
- Clearer disclosures and statements. He called for an end to fine print and confusing terms and conditions.
- A requirement that issuers make their contract terms accessible online so consumers can comparison shop. Issuers must offer one basic credit card with simple terms "that the average user can feel comfortable with."
- More accountability, with stronger law enforcement and oversight of the industry.
"I trust that those in the industry who want to act responsibly will engage with us in a constructive fashion, and that we're going to be able to get this done in short order," he concluded.
The meeting came a day after the House Financial Services Committee approved the Credit Cardholders' Bill of Rights (H.R. 627), 48-19. A House Financial Services subcommittee passed the legislation earlier this month. The bill moves next to the House floor.
The bill, sponsored by Rep. Carolyn Maloney, D-N.Y., would end arbitrary rate increases, allow consumers to set "hard" credit limits they couldn't exceed and require fairer allocation of payments to balances with different rates.
In late March, a Senate panel narrowly approved the Credit Card Accountability, Responsibility and Disclosure Act, or Credit CARD Act, by a 12-11 vote. The bill proposed by Sen. Christopher Dodd, D-Conn., would require 45 days' advance notice of interest rate hikes, impose limits on fees, and require applicants under age 21 to have a co-signer, adequate income or completion of a certified financial literacy course.