Rate Jumps, Fine Print: Is Help Finally on the Way to End Credit Card Woes?

Obama pledges credit card reform before a crowd of 2,000 in New Mexico.

ByABC News
May 13, 2009, 4:04 PM

May 14, 2009 <br/> RIO RANCHO, N.M.&#151; -- President Obama took his call for credit card reform to a high school gymnasium in New Mexico today, where he told an audience of more than 2,000 people that he wants Congress to pass a bill to protect consumers that he can sign into a law by Memorial Day.

"It's time for strong and reliable protections for our consumers. It's time for reform that is built on transparency, accountability, and mutual responsibility -- values fundamental to the new foundation we seek to build for our economy," he said.

"You should not have to worry that when you sign up for a credit card, you're signing away all your rights," Obama told a cheering crowd. "You shouldn't need a magnifying glass or a law degree to read the fine print that sometimes don't even appear to be written in English, or Spanish."

But the president didn't absolve cardholders of all accountability -- he urged them to to be responsible in their borrowing.

"This is not free money. It's debt and you should not take on more than you can handle," he said. "...Banks are businesses, too, and so they have a right to insist that timely payments are made."

Obama, who was joined by New Mexico Gov. Bill Richardson, spoke at a town hall meeting at Rio Rancho High School. Audience members included 50 local credit cardholders who sent letters and e-mails to Obama, "sharing their frustrations with the credit card industry," according to a statement by the administration.

One of the letter writers, Christine Lardner, introduced the president. Lardner, an Albuquerque resident whose husband runs a small business, said in her letter that the economic downturn forced her to use credit cards to pay for her two daughters' college tuition. After one college charged their bill to the wrong credit card, Lardner's interest rate tripled to nearly 30 percent.

"Raising my rate to 30 percent is ludicrous and corrupt," Lardner said. "I'm proud to say that our president has taken up this cause that has affected so many Americans who are trying to make a living and pay their bills."

Credit card legislation supported by the president, the adminstration said in a statement, will not allow card companies to raise rates on existing balances, which will give Larnder "confidence in her ability to manage her debt at the original interest rate."

The House passed the so-called "Credit Card Holders' Bill of Rights" last week and now the Senate is deliberating its own version of the bill.

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. 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.