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US Senate passes credit card bill US Senate backs credit card curbs
(about 10 hours later)
Lawmakers in the US Senate have voted overwhelmingly in favour of a bill that puts new restrictions on the credit card industry. The US Senate has voted overwhelmingly in favour of legislation to limit excessive credit card fees and stop sudden increases in interest rates.
The bill would curb sudden interest rate increases and hidden fees. Consumer groups and backers of the bill say it is an important step in protecting credit card holders.
The industry has warned that the measure could backfire, leading banks to issue fewer credit cards thus making it harder to get credit. But the industry says the measure could backfire, leading banks to issue fewer credit cards, so making it harder for consumers to get credit.
The bill would mark the first major financial reform made by the Obama administration. President Barack Obama is hoping to sign the measure into law by 25 May.
Analysts said it would hurt the profits of major credit card issuers such as Citigroup and Bank of America. The two versions of the legislation in the Senate and the House of Representatives, which is due to vote again on Wednesday, need to be reconciled before being sent to the president.
The bill must again go before the House of Representatives and then be approved by President Barack Obama, who is expected to sign it into law by the end of the month. They are very similar, correspondents say. However one possible stumbling block is a measure added to the Senate bill to allow people to carry loaded guns in national parks, which passed by 67 votes to 29.
House Democratic Leader Steny House said they might vote separately on the gun proposal so not to delay the credit card bill, the Associated Press reports.
Mr Obama is keen to have the credit card legislation on his desk for signing before the end of the week.
Senators voted 90 to 5 to pass the credit card overhaul.
"This is a victory for every American consumer who has ever suffered at the hands of a credit card company," said Democratic Senator Christopher Dodd.
Edward Yingling, president of the American Bankers Association, said the credit card bill, if signed into law, would undermine the availability of credit.Edward Yingling, president of the American Bankers Association, said the credit card bill, if signed into law, would undermine the availability of credit.
'Reasonable rules''Reasonable rules'
The bill would prevent companies from raising interest rates on existing balances unless a card holder was 60 days behind, and then it would require the rate to be restored to its previous level if payments were on time for six months.The bill would prevent companies from raising interest rates on existing balances unless a card holder was 60 days behind, and then it would require the rate to be restored to its previous level if payments were on time for six months.
Card holders would have to be told of rate increases 45 days in advance and it would also make it harder for people aged under 21 to be issued with credit cards.Card holders would have to be told of rate increases 45 days in advance and it would also make it harder for people aged under 21 to be issued with credit cards.
"This bill bans unfair rate increases, makes companies play by reasonable rules and magnifies the fine print so consumers aren't blindsided by their monthly bills," Democratic Senator Richard Durbin said."This bill bans unfair rate increases, makes companies play by reasonable rules and magnifies the fine print so consumers aren't blindsided by their monthly bills," Democratic Senator Richard Durbin said.
However, there are fears that if penalties on riskier borrowers are limited, credit card issuers could introduce annual fees and and curtail reward programmes to make up for lost revenue. Analysts say it will hurt the profits of major credit card issuers such as Citigroup and Bank of America.
And there are fears that if penalties on riskier borrowers are limited, credit card issuers could introduce annual fees and and curtail reward programmes to make up for lost revenue.