In response to consumers’ growing frustration over skyrocketing credit card interest rates and hidden fees, Pres. Barack Obama vowed that he would come up with a credit card law that would protect consumers from the fine print that have become a source of anxiety and anger of credit card users.
“The days of any time, any reason rate hikes and late fee traps have to end,” the President said.
Obama met with credit card executives Thursday in a business meeting at the White House where he cautioned them that he will be working for stronger and more reliable protection for consumers against deceptive fees and fluctuating interest rates that credit cards are getting to be known for these days.
Following the closed-door conference, Obama continued to mince no words with the credit card companies. “I trust that those in the industry who want to act responsibly will engage with us in a constructive fashion, and that we’re going to get this done in short order,” he said.
Among those invited for the White House meeting were executives from the leading credit card issuers such as Bank of America® Corp., American Express Co., Citigroup, JPMorgan Chase, Wells Fargo, Mastercard Inc., and Visa.
Even before Obama arranged this meeting however, a piece of legislation aimed at limiting credit card fees and reducing consumer penalties was already making its way through Congress, and in fact, cleared a Congressional panel a day before the closed-door discussion with top credit card issuers.
The bill, known as the Credit Cardholder’s Bill of Rights, was passed by the members of the House Financial Services Committee in a 48 to 19 vote. If fully enacted into a law, the legislation could bring sweeping reforms into the industry which has come into close scrutiny for the past few weeks due to massive complaints from credit card holders.
For Pres. Obama, any bill that is worth looking into should be able to effectively address the following:
- Protect the cardholders from “sudden, surprising jumps in fees”;
- Have companies simplify their forms such that everything is put in black and white to the client – no stipulations in fine print;
- Present the customers with a convenient, user-friendly means to make a comparison shopping on different credit card deals; and
- Firm enforcement so that violators can experience the “full weight of the law.”
For many of consumers, a law against such practices couldn’t be passed soon enough. It is not uncommon these days to hear of credit card rates that have jumped up from 8% to about 15%, from 9.9% to close to 16%, even from 1.9% to a high of 29.9%. What’s worse is that many of the individuals that are being slapped these sudden rate hikes or deep cuts to credit limits are those who are good-paying cardholders.
Banks however, are wary of any bill that will impose such tough measures, saying that this would deeply affect their fee based income at just the time when they are trying to stabilize their own finances.
The American Bankers Association, through its senior vice president for card policy Kenneth Clayton, further expresses concerns that a new legislation passed could bring economic matters to a worse state by restricting lenders’ ability to issue credit cards, thereby resulting also to a reduction in credit availability to many Americans.