As the economic downturn continues to put a strain on household finances, some credit card industry practices have come under increased scrutiny. Interest rates around 30 percent, late and over-limit fees, and reduced credit limits make paying bills on time increasingly difficult for consumers.Last week, members of Congress held a news conference to discuss legislation that will address measures designed to curb some of these aggressive lending tactics.
The bill, currently proposed in the Senate, would tighten restrictions on card companies' ability to raise interest rates and on their ability to market cards to people under age 21. It also requires that statements be delivered three weeks before bills are due and provide more notice before changing rates.
“We like credit cards — they are valuable vehicles for many people,” Christopher Dodd, chairman of the Senate banking committee, said at the news conference. “It’s when these vehicles are being abused by the card issuers at the expense of the consumers that we must step in and change the rules.”
The legislation has support from both Democrats and Republicans in the Senate, and the House already passed a less-stringent version on the bill that will enact similar limitations. President Obama also called for change in the credit card industry several times since taking office.
The measure currently under consideration in the Senate does not include any mention of capping interest rates, and some reformers say that consumers will not receive adequate protection until rate caps are enacted. As it stands, however, the measure seems to have widespread support and is expected to pass easily.
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