Could Credit Card Reform Come Sooner Than Expected?
Over the past 24 hours, credit card reform has been one of the hottest topics in nearly every branch of our government. Major activity has taken place in the Senate, the House of Representatives and the White House.
* Yesterday, the U.S. House Committee on Financial Services voted 48-19 to approve the Credit Cardholders’ Bill of Rights. This bill will provide protection against rate hikes on existing balances, set standards for terms and conditions, and limit credit card fees. It will soon go to the full House of Representatives for a vote, possibly next week.
* Today, President Obama met with executives of card issuers to use presidential persuasion to pursue consumer protections and encourage changes from credit card issuers. He made it clear that he will sign credit card legislation. He acknowledged that he wants the legislation to accomplish the following: contain protections against sudden interest rate increases; prohibit excessive fees; use plain language in the application forms and the terms and conditions; make available customer-friendly comparison shopping on credit cards; and provide greater enforcement for violators.
* Today, Senators Charles Schumer and Chris Dodd called on the Fed to freeze credit card interest rates tied to existing balances until stricter rules take effect next year. This ‘freeze’ comes in response to credit card issuers increasing rates and fees on so many consumers before the Federal Reserve reforms go into effect in July 2010.
Experts say that recent reforms and a financial crisis forced the credit card issuers to aggressively raise interest rates and fees; this, combined with the billions of taxpayer dollars going to bailout certain banks, has led to a polarizing situation. Thousands of taxpayers are expected to protest at Bank of America branches on April 28th in advance of Bank of America’s Annual Shareholder Meeting, sources say.
In response, Congress is now fast-tracking credit card reforms; President Obama publicly pushing this reform only helps speed this process.