USA: Credit Card Restrictions Close to Enactment

. WASHINGTON, DC / The Washington Post / Economy Watch / Business / May 20, 2009 By Nancy Trejos, Washington Post Staff Writer Landmark credit card legislation, poised to reach President Obama's desk by Memorial Day, will force the card industry to reinvent itself and consumers to rethink the way they use plastic. The Senate cleared a hurdle yesterday, voting 90 to 5 to pass a bill that would sharply curtail credit card issuers' ability to raise interest rates and charge fees. Lawmakers will now turn to reconciling differences with a similar bill approved by the House last month. Swift passage was expected given that the Senate version received so much bipartisan support and that the White House has pressed for action. When Obama signs the bill into law as expected, the $960 billion credit card industry will go through a restructuring that could have broad implications for consumers. The bill prohibits card companies from raising interest rates on existing balances unless a borrower is at least 60 days late. If the cardholder pays on time for the following six months, the company would have to restore the original rate. On cards with more than one interest rate, issuers will have to apply payments first to the debts with the highest rates, which would help borrowers pay off their cards more quickly. Treasury Secretary Timothy F. Geithner said the bill "will help create a more fair, transparent and simple consumer credit market." Card executives said the changes will force them to charge higher rates and annual fees to delinquent customers and those in good standing. Click to continue reading © 2009 The Washington Post Company