Congress is nearing completion of a bill that would place tough new restrictions on credit card companies and protect card holders from arbitrary rate hikes and other deceptive practices.
Bipartisan support for the bill has swelled and senators could vote this week on a "Bill of Rights" for owners of credit cards. The bill would force credit card companies to give consumers 60 days before changing a credit rating because of late payments and give consumers a path to reclaiming their old rate with six consecutive on-time payments.
Here is an overview, prepared by Democrats, of the bill.
It would also cut down on excessive fees that companies charge for making online payments and would require companies to be clearer about how long it takes to pay down a balance making only the minimum payments.
President Obama called on Congress to send a bill to his desk by Memorial Day.
When 10,000 families are losing their homes every day, 20,000 losing their jobs, the idea that the card companies will go along and raise those rates, add on fees, it's outrageous and it affects every demographic group, not just one income group but across the country," said Sen. Chris Dodd, D-Conn., on the Senate floor Tuesday.
It was a deal between Dodd, who chairs the Senate Banking Committee, and conservative Republican Richard Shelby, who normally preaches the free market, that propelled the legislation to the Senate floor. Support from both sides of the political spectrum is perhaps a symptom of the frustration lawmakers feel in their districts from voters toward credit card companies.
"This legislation addresses some practices that are simply unnecessary. It gives consumers the chance to have a more equitable relationship with the credit card companies and preserves the basic framework necessary of a very important marketplace," said Shelby, a conservative Alabama Republican.
Consumer Advocates Hail the Bill as a Huge Step
Consumer advocates are hailing the bill of rights as a huge step for individuals over companies.
"Why is credit card debt different than any other form of debt? Credit card companies have given themselves the right to change any interest rate or fee at any time for any reason," said Travis Plunkett of the Consumer Federation of America.
Plunkett said more Americans have credit cards than have mortgages or car loans, so this legislation will reach deep into society.
Banks and the credit industry oppose the new regulation, arguing that additional rules will force them to cut down on the availability of credit and raise rates for the people who make their all their payments on time.
But Plunkett said rates are already up and credit is already hard to come by.
"That's happening now and there's no regulation," he said, arguing that smart regulation could actually improve the industry.
Republicans and Democrats will both try to attach political amendments to the popular credit card bill. It is unclear if any of them will hurt the bill's chances of passage. Sen. Tom Coburn, R-Okla., proposed an unrelated amendment to roll back National Park Service rules that forbid loaded weapons in parks. Senators attached the guns amendment to the credit card bill with a strong vote of 67-29. It is unclear if any of those amendments will ultimately jeopardize the underlying bill.
The House of Representatives has already passed its own version of the credit card bill. Senate Majority Leader Harry Reid said today he hopes that Democrats in the House will simply accept what the Senate passes later this week and send that to President Barack Obama as soon as possible.
"What I would like to see is the credit card bill passed, go to the House, have them accept it so the president can sign it right away," Reid said Tuesday.