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Archive for Friday, April 24, 2009

President seeks protections for credit-card users

April 24, 2009

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— President Barack Obama said Thursday he is determined to get a credit-card law that eliminates the tricky fine print, sudden rate increases and late fees that give millions of consumers headaches.

“I trust that those in the industry who want to act responsibly will engage with us in a constructive fashion, and that we’re going to get this done in short order,” Obama said, delivering a pointed message to leading executives of credit-card issuing companies after a closed-door White House meeting.

Both the House and the Senate are pursuing bills to give consumers greater protections as an expansion of new rules slated to take effect next year. Obama said his economic advisers will examine the various proposals and work with Congress and the industry, but he made clear he wants to sign a bill into law.

“The days of any-time, any-reason rate hikes and late fee traps have to end,” Obama said.

At issue is how to protect consumers, particularly in a deep recession, while not imposing the kind of rules that could make it harder for banks to offer credit or put credit out of reach for many borrowers.

Industry executives left the White House without talking to reporters.

Later, one of the participants, American Bankers Association president Edward Yingling, said the executives listened to Obama’s concerns and “agreed to work with the administration to address them.” In a statement on behalf of the executives, he said consumer protection must be balanced with “ensuring that credit remains available to consumers and small businesses at a reasonable cost.”

The credit-card executives made the case in the meeting that the sweeping rules already ordered by the Federal Reserve, due to take effect next year, address many of the concerns held by the president and Congress.

“He disagreed with that case and believed that more needed to happen,” White House press secretary Robert Gibbs said of Obama.

So Obama outlined the principles for any legislation: Protections so that consumers won’t face sudden, surprising jumps in fees; requirements that companies publish their forms in plainspoken language, with no more fine print; the availability of customer-friendly comparison shopping on credit-card offers; and greater enforcement so that violators feel the full weight of the law.

The president made no mention of the responsibility of consumers to keep themselves from getting overextended.

As one possibility, Obama said it may help if all credit-card issuers offer a basic, “plain-vanilla” card as a default option for consumers.

The president also acknowledged the importance of credit cards; almost 80 percent of U.S. households have one.

Credit-card debt has increased by 25 percent in the past 10 years, reaching $963 billion by January, according to figures released by the White House. The average outstanding credit card debt for households that have a credit card was $10,679 at the end of 2008, according to CreditCard.com, an online marketplace designed to link consumers and card issuers.

Comments

SettingTheRecordStraight 5 years, 8 months ago

Because we're too stupid to enter into private legal contracts with businesses, we need the all-knowing, all-protecting government to set the terms of those contracts. Am I getting this right?

pace 5 years, 8 months ago

No, you aren't getting it right. I had closed a card, several years ago. I was paying it off as I got 3.9 life of the loan. I closed it when they wanted to change the offer. I never missed nor was I late. Then one day, when I was on the road, my account changed. I called and was within a day of being able to save the account as agreed upon. They explained they had sent a change notice and were allowed to change even closed accounts. If I hadn't been able to watch it online and in the habit of checking, they would of really messed me up. Consumer protection is about holding businesses responsible to sensible standards. They make deals then fine print or out right deceive, if they want to do business, they should be responsible for fair practice, not rewarded for being able to trick and steal. I also believe I have a duty to be a honest customer and pay my bills, but don't paint the horse.

Godot 5 years, 8 months ago

You do not have the right to "credit." The constitution does not give you the right to use government to force people with money to loan money to you.

You don't like the terms of your credit card lender? The don't use the card.

Cut it up.

Throw it away.

Pay cash.

Simple as that.

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