President Barack Obama announced today that he will push for a law to protect consumers from unscrupulous practices by credit card companies.
The president outlined his plans after meeting this afternoon with the chief executives of the credit card industry.
Obama said he wants legislation that will prevent consumers from facing a sudden, surprising rise in fees. He said credit-card companies must publish their forms in plainspoken language. He also said companies must make it easier for people to do comparison shopping.
Both the House and Senate are considering a credit card "bill of rights" to limit the ability of credit-card companies to raise interest rates on existing balances and to require greater disclosure.
Prior to Obama's meeting, Sens. Chuck Schumer and Chris Dodd sent a letter prior to Fed Chairman Ben Bernanke, asking him to impose an emergency freeze on credit card interest-rate hikes. While the Fed already has a pending rule to forbid credit card companies from raising rates on borrowers with existing balances, it does not go into effect until July 2010.
Banks warn that this legislation could backfire, restricting lenders and actually making less credit available to Americans during the economic crisis.
Almost 80% of American households have credit cards. The average outstanding credit card debt for households was $10,679 at the end of 2008, according to CreditCard.com, an online marketplace designed to link consumers and card issuers.
Market response in the hour after Obama's 2 p.m. comments was measured, with
Bank of America
up 30 cents to $8.77,
up 81 cents to $163.81 and
, at $58.10, and
, at $3.15, essentially unchanged.
Discover Financial Services
climbed 44 cents to $8.51 in response, while
jumped 72 cents to close at $20.97.
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