House Panel Approves Credit Card BillCredit card legislation to crack down on interest rates and fees cleared a key House panel Wednesday, the day before President Obama meets with 14 executives from the largest credit card companies. The bill, approved by the House Financial Services Committee, would limit increases on credit card interest rates and fees.
The measure could go to the full House for a vote as soon as next week. The White House had been quiet about the bill until last Sunday when Obama economic adviser Larry Summers expressed the administration's view of getting tough on credit card companies. Obama had advocated a credit card holder bill of rights during his campaign. Obama will reveal its proposed changes after the meeting with the credit card executives.
One of the changes may be a provision requiring better explanations to card holders about the long-term consequences of making only minimum suggested payments. This legislation reflects efforts by consumer groups and Democrats to rewrite the rules that govern lending practices by credit card companies, banks and other lenders. It would crack down on some of the most outrageous abuses, leveling the playing field so consumers have more control over their credit.
The House bill is similar to tougher rules the Federal Reserve passed late last year but those don't go into effect until July 2010.
The Fed changes would halt higher interest rates being imposed when consumers are late paying unrelated bills. It would also stop companies from averaging finance charges from two previous cycles, a practice that hurts consumers who carry balances and then pay them off. Some Republicans say the Fed rules are enough and that the House bill would serve no purpose.
But supporters point to the fact that the Federal Reserve could later undo the rules if Congress does not pass a law.