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Senate passes bill on credit card reform

Latest update : 2009-05-19

The US Senate has adopted a new law aimed at protecting the public against predatory credit card schemes. The bill seeks to shield consumers from misleading small print in card contracts, to set credit limits and to fairly allocate payments.

AFP - The US Senate Tuesday adopted legislation aimed at protecting consumers from predatory credit card companies in a country where plastic has been king.

"This is a good moment for our country and a good moment for consumers," said Senator Chris Dodd, one of the main backers of the bill, after the Senate voted 90 to five in favor of the text.

Lawmakers in the House of Representatives voted on their version of the bill in late April where it was passed by 357 votes in favor to 70 against.

The Senate text is tougher than that proposed by the House, and has demanded for example that credit card companies wait 60 days before penalizing clients by upping their interest rates, compared with 30 days demanded by the House.

President Barack Obama on Thursday urged Senate to pass the credit card legislation and reconcile it with the bill already passed in the House.

"I am calling on Congress to take final action to pass a credit card reform bill that protects American consumers and send it to my desk so I can sign it into law by Memorial Day (May 25)," Obama said.

"There is not time to delay. Time to get it done."

The "Credit Cardholders Bill of Rights" seeks to shield consumers from misleading small print in card contracts, empower cardholders to set their own credit limits, and require companies to fairly allocate payments.

The measure also targets practices such as marketing credit cards to minors, takes aim at unfair rate hikes and charges and improves transparency for people shopping around for credit cards.

It also obliges credit card companies to give clients 45 days notice if they plan to increase interest rates.

But an amendment put forward by independent Senator Bernie Sanders aiming to set a 15 percent ceiling on interest rates was rejected last week.

"Enough is enough, it’s time for strong and reliable protections for our consumers," Obama said told a town-hall meeting in New Mexico last week.

"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."

Date created : 2009-05-19

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