Senate Approves Credit Card BillThe Senate voted on Tuesday to approve passage of a tough credit card bill that will curtail fees and interest rates hikes. The bill passed in a 90-5 vote. This will make it tougher for credit card issuers to raise fees and interest rates beginning as early as next year.
The bill will now go back to the House of Representatives, which is expected to begin work to pass it before the holiday weekend. The bill may end up on President Barack Obama's desk for signing before Memorial Day, as he had called for earlier in the month.
The legislation is somewhat tougher on card issuers than the new Federal Reserve rules are that will go into effect in July 2010.
The Senate bill would take effect in nine months and make it harder for consumers under 21 to get credit cards. It also bans rate hikes unless a consumer hasn't paid the bill in 60 days. It requires the card issuer to restore the previous rate after six months if the minimum payments are made.
The financial services industry has stated the bill would make the credit crisis worse and force credit card issuers to no longer offer credit to risky credit card holders. American Bankers Association president Ed Yingling said in a statement on Tuesday, "We are concerned that the Senate bill will have a dramatic impact on the ability of consumers, students and small businesses to obtain and use credit cards."
This move to curb excessive fees and rate hikes by credit card issuing banks has been a long time in the works. The House passed a bill in 2008 and again earlier this year. Public outrage propelled the current legislation, and was championed by President Obama.
In recent months, credit card companies have raised fees and interest rates. From November 2008 to February 2009, rates increased from an average to 13.08% from 12.02%, shows a Federal Reserve Board report. At the same time, more people are not able to make their credit cards payments and are walking away from the debt.