Obama Pushes Credit Card Measure As Vote Nears

President Obama continued Thursday to push for passage of legislation regulating credit cards, as the Senate drew closer to a final vote on a measure that would limit contract changes, fees and interest rate hikes.

Obama pressed the Senate to pass a "credit card bill of rights" at a midday town hall meeting in Rio Rancho, N.M. The president has asked lawmakers to send a bill for his signature by Memorial Day.

"It's time for strong and reliable protections for our consumers. It's time for reform that is built on transparency, accountability and mutual responsibility — values fundamental to the new foundation we seek to build for our economy," Obama told the crowd.

Greater protection for credit card holders was a theme of Obama's presidential campaign, and the recession has increased the fervor behind the push for legislation. Last month, the president met with representatives of the credit card industry, and the Federal Reserve has taken steps to improve disclosures.

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At the town hall session, the president said rising costs are forcing more families to pay for medical bills, food, gas and tuition with credit cards. And, he said, unfair practices are keeping them from digging their way out of debt. One New Mexican woman saw her credit card interest rate jump to nearly 30 percent because she mistakenly went over the card's limit, Obama told the crowd.

Confusing Terms

"We're lured in by ads and mailings that hook us with the promise of low rates, while keeping the right to raise those rates at any time for any reason; even on old purchases; even when you make a late payment on a different card," Obama said.

Obama said critical elements of the credit card legislation include:

— statements that are clear;

— a ban on unfair rate increases;

— prevention of unfair fee and interest rate charges;

— contract terms that are straightforward;

— protections for students and young people.

The House has already approved a bill containing some of Obama's proposals, and the Senate could vote on a similar bill as early as Friday.

Both measures would require that customers be given 45 days' notice before their rates are hiked. The bills also would stop companies from giving a credit card to anyone 18 or younger.

Obama said too much debt is one of the causes of the economic crisis, and Americans must change their ways. But families shouldn't be afraid of falling victim to unfair practices.

"Americans know that they have a responsibility to live within their means and pay what they owe," Obama said last week in his radio and Internet address. "But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties and hidden fees that have become all too common."

Obama told the crowd at the town hall meeting that credit card due dates are often confusing and terms may be difficult to understand.

"You shouldn't need a magnifying glass or a law degree to read the fine print that sometimes don't even appear to be written in English, or Spanish," the president said.

Regulation Could Backfire

The White House said nearly 80 percent of U.S. households have a credit card and nearly half carry a balance.

Under the Senate bill, a credit card customer must be more than 60 days behind on payments before being subject to retroactive rate hikes. Even then, the company issuing the card would have to restore the previous, lower rate after six months if the consumer pays the minimum balance on time.

If a lender believes the person poses a lending risk, it could still increase the interest rate on future buys.

Despite complaints by consumers that credit card companies charge interest rates that are abusive, a proposal to cap rates at 15 percent failed on Wednesday.

The American Bankers Association has warned that the measure could backfire by restricting credit for consumers at a time when they need it the most.

Industry members also argue that new rules by the Federal Reserve, scheduled to take effect in July 2010, address many of the concerns expressed by Obama and lawmakers.

From NPR and wire reports

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