Credit card bill 'close to passing'

05.14.09
By Sarah Beldo

Legislation that would limit credit card fees and rate hikes, as well as providing other consumer protections, is very close to being passed by the Senate.

Banking Committee chairman Chris Dodd told Bloomberg that lawmakers may successfully pass the bill as early as today.

This week, senators are debating approximately 21 amendments to the current bill, which was sponsored by Dodd.

One proposal to cap interest rates on credit card balances at 15 percent, introduced by Vermont Senator Bernie Sanders, was rejected yesterday by a vote of 60-33.

Sanders, citing statistics that one-third of credit card customers pay rates above 20 percent, argued that "when banks are charging 30 percent interest rates, they are not making credit available - they are engaged in loan sharking."

However, some lawmakers who back the broader legislation worried that an interest rate cap would be too divisive to ensure the bill's passage, the New York Times reports.

So, what is included in the bill? There are a number of measures aimed at protecting consumers from what many have deemed unfair practices, including a ban on retroactive interest rate increases - unless a consumer is 60 days late with a payment.

The legislation also prohibits the controversial practice known as "universal default," in which issuers regularly check a customer's credit report to assess their risk. If the issuer spots a red flag, such as a late payment to a different lender, they may raise the cardholder's interest rate.

Meanwhile, as senators put the final touches on the credit card bill, President Obama is holding a town hall meeting today in Rio Rancho, New Mexico to discuss credit card reform. The president is pushing for Congress to finalize legislation for him to sign by Memorial Day.

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The president is pushing for Congress to finalize legislation for him to sign by Memorial Day.