Credit card companies are likely to have tougher rules to live by as the U.S. Senate on Tuesday voted 90-5 to approve a new bill restricting credit card practices; President Barack Obama is expected to sign it into law before month end.
The enactment of the legislation is the first of several financial regulation reforms expected from the Obama administration which will regulate credit card practices by controlling sudden hikes in interest rates and late fee charges among others.
The House of Representatives passed its bill on April 30 by a 357-70 vote.
The bill will prohibit so-called double-cycle billing, retroactive rate hikes and bar companies from issuing anyone under 18 with a credit card.
The bill does not include a cap on interest rates, as some lawmakers wanted. Nor does it bar lenders from issuing cards to college students, although that is limited under the bill.
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.
The new bill has been met with opposition by the banking industry and said it could restrict credit at a time when Americans need it most.
Banks have defended their existing interest rates and fees on grounds that the nature of the business of lending money to consumers who promise to repay is a very risky one.