Saturday, May 23, 2009

President Obama Signs Into Law New Credit Card Industry Reforms

President Obama has now signed into law new legislation that curtails some outrageous unfair practices by the credit card industry including sudden interest rate hikes, outrageous sudden late fees, or offering credit cards to college students under 21 who do not have a job and the ability to pay for the bills.

A few companies have deliberately been very slow to process incoming payments mailed to them, and then charged credit card users with interest rate hikes. The practice has become a racket with a few dishonest credit card companies and the new legislation makes this practice illegal. Other dishonest companies have preyed on young people of college age with no visible means of support or a job, and offered them a line of credit. The new legislation requires that parents give permission and take responsibility for any credit card issued to a college student under 21 who does not have employment or a source of income.

But the president also tempered the signing of this important consumer protection legislation with the warning that he is not giving irresponsible persons "a free pass" and that he fully expects "consumers to live within their means".

The new legislation means to prevent some outrageous consumer abuses by some dishonest credit card issuers who use outrageous excuses to suddenly jack up interest rates or to charge excessive fees for claimed over-the-limit purchases, often when these credit card issuers are slow to process payments and credit cards are used for paying bills online, etc.

According to credit card industry information, about 90 million American households now hold debt of $10,500 or more dollars. A figure which has worsened during the recession as some families have relied too much on credit cards to get them through hard financial times.

The other flip side of this whole consumer issue is that while this legislation takes time to become law, some credit card companies might begin to impose annual fees on responsible credit card users who pay their full bills on tome each month unless they carry a balance subject to high interest rates. The other possibility is that free perks or benefits for good credit customers might disappear as some credit card companies would cut costs associated with issuing cards.

But overall, this is a very important piece of consumer legislation, and yet another issue that separates the Obama Administration from the previous Bush Administration which seemed far more interested in addressing the lobby industry of banks and credit card issuers than consumers.


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