Well, well, Credit Card Reform is before the the U. S. Senate today. However, as is typical of Congress, the Senate version is not the same as the one that passed the House. President Obama wants a final version on his desk, by Monday.
WASHINGTON (AP) — Unable to stop the tide of foreclosures and job losses, lawmakers are hoping to give voters at least some breathing room in the economic downturn by banning arbitrary credit card rate hikes and excessive fees.
Legislation that would impose new restrictions on the industry was expected to pass the Senate on Tuesday. With the House having endorsed a similar measure already, Democratic leaders said they hoped to send a final version to the president to sign by week's end.
If Obama signs the bill, as expected, the credit card industry would be required within nine months to change the way it does business: Lenders would have to post their credit card agreements on the Internet, let customers pay their bills online or by phone for free and give customers 45 days notice and an explanation before interest rates are increased.
In a key provision addressing a concept called "universal default," a customer would have to be more than 60 days behind on a payment before seeing his rate on an existing balance increase. Even then, the credit card company would be required to restore the previous, lower rate after six months if the consumer pays the minimum balance on time.
- Associated Press
Of course, the banking industry doesn't like the idea of reform. I mean, why would they, the legislation, would cut into their profits and and predatory style lending.
The banking industry is pushing back, warning lawmakers that the legislation would restrict credit at a time when Americans need it most. They defend their business practices as necessary to protect themselves when providing money to consumers with no collateral and little more than a promise to pay it back.
- Associated Press
However, according to the New York Times, the Credit Card industry, is looking at new sources of revenue. As well as some old sources that they had mostly moved away from.
Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.
Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.
Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.
- New York Times
Yep, that means an end to the argument, in favor of credit cards, where people say, "but I pay off my card every month." Because, if these new revenue sources are enacted, to counteract the dried up sources (thanks to Congressional intervention), you will be paying interest on that debt, as soon as you swipe that card.
Still though, I think, Congress is on the right track with this piece of legislation.
****Update: Senate passes it's version***
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