Consumers in debt can be given the chance to regain their older, lower rates if they pay their bills on time for six months, a compromise reached by lawmakers seeking changes in federal law governing the credit card industry.
The top senators on the Senate Banking Committee reached agreement on provisions of a credit- card consumer-rights measure, bringing the legislation more in line with a bill that passed the House on April 30.
Senate Banking Committee Chairman Chris Dodd, D-Conn., said Monday that the agreement was part of a broader package on credit card reform. The bill was expected to pass this week with President Barack Obama's support.
President Barack Obama urged Congress on Saturday to approve new regulations to halt sudden rate hikes, unfair penalties and hidden fees.
Americans know that they have a responsibility to live within their means and pay what they owe. But they also have a right to not get ripped off, Obama said in his weekly radio address.
Abuses in our credit card industry have only multiplied in the midst of this recession, when Americans can least afford to bear an extra burden, he said, calling on Congress to send him a bill he could sign by the Memorial Day holiday on May 25.
The latest proposal would prohibit lenders from increasing interest rates on past buys unless the cardholder has fallen at least 60 days behind. At the same time, lenders would be required to review a cardholder's terms every six months.
The bill will prohibit so-called double-cycle billing, retroactive rate hikes and bar companies from issuing anyone under 18 with a credit card.
If the new measures become law, they won't take effect for a year, except for a requirement that customers get 45 days' notice before their interest rates are increased. That would take effect in 90 days.