U.S. House Passes Credit Card “Bill of Rights”
May 4th, 2009 • Posted in: NewsSponsors say it puts brakes on deceptive practices
WASHINGTON
The U.S. House of Representatives last week passed legislation outlawing certain credit-card practices that critics warn are deceptive and exploitative.
USA Today reports that the credit card “bill of rights” puts limits on interest and fees, and requires 45 days’ notice before rate hikes.
The Chicago Sun-Times notes that Financial Services Subcommittee head Rep. Luis Gutierrez (D-Ill.) steered the bill through the House, warning that “a growing share of the industry’s revenues come from deceptive tactics, such as universal default terms spelled out in fine print — the terms and conditions of which can be changed at any time for any reason with 15 days’ notice or less. That is unacceptable.”
Baltimore Sun financial columnist Jay Hancock says both sides of the political spectrum leveled arguments for reform.
“The liberal case for credit-card reform is well known: Greedy banks victimize card users with high interest rates and outrageous fees; Congress must crack down to make the system fair,” Hancock writes. “Here is the less-known, conservative argument: Credit card complexity prevents users from making rational decisions about borrowing and spending, thus hurting the economy; Congress must intervene to make the system understandable.”
Edward Yingling, president of the American Bankers Association, opposed the reform, telling the Los Angeles Times that while it was “well intentioned,” it could have “the unintended consequences of limiting credit for responsible consumers and even making it more expensive.”
Sources: Chicago Sun-Times, Apr. 30 — USA Today, Apr. 30 — Baltimore Sun, Apr. 29 — Los Angeles Times, Apr. 29.
For more information, see: Related Newsline story, Jan. 5 — Related Newsline story, Dec. 22, 2008 — Related Newsline story, Aug. 11, 2008 — Related Newsline story, June 30, 2008 — Related Newsline story, Feb. 25, 2008.
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