House Approves Credit Card BillThe House voted on the Credit Cardholders' Bill of Rights on Thursday and overwhelmingly approved the bill that is aimed squarely at protecting consumers from usury rates and hidden fees by credit card companies.
Banks are opposed to legislation and warn that, if signed into law, this measure would reduce the amount of credit available to consumers. President Barack Obama supports the overhaul of the industry and is expected to sign the bill into law after it is voted on in Senate. A Senate version is expected to be considered next week.
The measure would prohibit so-called double-cycle billing and retroactive rate hikes and would prevent companies from giving credit cards to anyone under 18.
Citigroup, Bank of America, JPMorgan Chase, and Capital One had nearly 77 percent of the credit card market when it was last measured in late 2007. These proposed changes would cost the banking industry more than $10 billion a year in interest payments, according to one study.
The changes come at a time of recession and rising unemployment and consumers, even those with strong credit, have defaulted on their credit cards. Banks are losing billions from these losses on top of mortgage defaults. The credit card debt in America has risen 25 percent in the last 10 years, reaching $963 billion in January. The average outstanding credit card debt for households that have a credit card was $10,679 at the end of 2008.