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Credit card bill closer to Obama's desk

Congress on Wednesday sent to President Obama a bill that makes it tougher for credit card issuers to raise fees and interest rates.

The move caps a years-long crusade by consumer groups and Democrats to rein in what they say are abusive practices that prey on consumers. The approval came despite strong objections by banking industry advocates, who say it could result in tightened credit to Americans.

The House voted 361-64 in favor and also approved by 279-147 an unrelated measure allowing people to carry guns into national parks.

The Senate passed the credit card bill, along with the unrelated gun measure, by a 90-5 vote on Tuesday.

President Obama will sign the bill on Friday, a White House spokeswoman told CNN.

The credit card rules would take effect in February. The bill is moderately tougher on banks and card issuers than are new Federal Reserve rules set to take effect July 2010.

The legislation make it harder for people under age 21 to get credit cards. It would also ban rate hikes unless a consumer is more than 60 days late - and then restore the previous rate after six months if minimum payments are made.

"Over the past three years as I have labored on this bill, the need to stop credit card abuses has become ever more apparent with every passing billing cycle," said the bill's House sponsor, Rep. Carolyn Maloney, D-N.Y., on Tuesday.

The bill marks a major loss for the banking industry.

Financial services representatives have decried the bill, saying it would exacerbate the credit crisis and force banks to drop some risky credit card holders. The American Bankers Association said the legislation would prompt banks to reinstate annual fees and higher interest rates for all card holders, an outcome that would penalize those with good credit who pay their bills on time.

Some House members voiced those concerns Wednesday.

"At a time when Americans are struggling to pay their mortgages, groceries and health care costs, why would we want to make credit more expensive and less available?" said Rep. Jeb Hensarling, R-Texas.

The credit card legislation has been a long work in progress. The House passed a bill in 2008 and again earlier this year. The legislation, which stalled in past years, was propelled by public outrage and pressure by President Obama.

Maloney added that she thought it was "unfortunate" that the measure to allow concealed weapons in national parks remained as part of the credit card measure. She and several other Democrats voted against the gun measure.

In recent months, credit card companies have been raising fees and interest rates. From November 2008 to February 2009, rates increased from an average to 13.08% from 12.02%, according to 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 debt, according to a Federal Reserve report.

However, Treasury Secretary Tim Geithner said Monday he was not concerned about a consumer debt "bubble."

"Americans are going to be reducing how much they borrow, improving their balance sheets, saving more," he said. "Banks are still going to have losses they're going to have to adjust to. And that's what's going to make the process of repair here longer .... But that's a necessary, healthy process of adjustment for us to go through.

Debt Consolidation

Financial Freedom
It's the American way—charge now, pay later. We are endowed with certain inalienable rights—among these are Life, Liberty and the Pursuit of Happiness. This translates into charge, charge, charge! With this “right” comes a certain amount of cockiness—especially among the young—that credit and charging is not a privilege, but an absolute entitlement.

Somewhere, something goes wrong with the American psyche—the average American is $25,000 in debt—and soon this “entitlement” becomes a handicap bringing about credit card abuse. Knee deep in debt, unable to maintain even minimum monthly payments, the philosophy continues with, “Oh, well! They can’t get blood from a stone.”

“They” are the credit lenders who have graciously empowered you with a product (department stores) or service (school tuition, rent, utilities etc.) and extended these to you immediately in return for your promise to pay them back in the near future (usually in 30 days).

Extending credit (banks, credit card companies, mail-order catalogs) is a dollar amount advance which comes with interest attached to the original amount granted. For example, paying the minimum each month on an advance or credit of $1,200 soon turns into $1,404 within a year with interest. If you miss paying a month, the interest compounds and before you know it, you’re drowning in debt.

As quickly as you became king of the hill, you’re suddenly a fugitive from collection agencies— not opening mail except from family and friends, screening your calls and quite often even disguising your voice. From the dizzying heights of charge, charge, charge, the tumble from the top finds you on the bottom of the bills, bills, bills heap.

There is a way to get out from under the heap with debt consolidation. Debt consolidation combines all of your unsecured monthly bills—credit cards, rent, telephone and utility bills, federal and state income taxes, property taxes, fuel bills, tuition, alimony and child support—into one lower monthly payment at a lowered interest rate.