Credit Card Bill Passed

The House of Representatives today gave final approval to a credit card bill that would prohibit credit card companies from arbitrarily raising interest rates on existing balances, and charging certain fees. Final House passage of the credit card bill in the House was by a margin of 361 to 64, and it followed Congressional approval that was passed on Tuesday (May 19).

The House had approved a more diluted credit card reform bill some time last month, but chose to send the stronger Senate version to the President, who will now be able to sign the bill into law by Memorial Day, as he had requested.

This landmark new credit card legislation will undoubtedly force banks and the credit card industry to reinvent itself, and also force consumers to rethink the way they use credit cards. The bill will prohibit credit card companies from raising interest rates on existing balances unless the borrower is at least 60 days late. If the card holder pays on time for the following 6 months, the company would have to restore the original rate. On cards with more than one interest rate, issuers will have to apply payments first to the debts with the highest rates, which would thus help borrowers pay off their cards more quickly.

It is important to note though, even after President Obama signs the bill, the law won’t fully take effect for nine months. That’s a 9-month loophole that reportedly has some consumer groups concerned that credit card companies will use this time to hike interest rates and fees whilst they can. Consumers, be on the look out for this!