Senate Passes Credit Card Reform Bill

Senate Banking Committee Passes Credit Card Reform Bill

With a 12 to 11 vote, the U.S. Senate Banking Committee approved a bill that would curb questionable credit card practices. In a recent speech President Barack Obama made clear that changes needed to be enacted to prevent credit card companies from charging unfair fees. Unfair fees can be defined in many ways. The goal of the new administration is to define in clear terms what credit card companies can and can not charge it's customers. The changes will not take effect until July 2010.

There have been questions on whether the bill will provide an overall benefit to the consumer.  U.S. Connecticut Senator Chris Dodd has acknowledged these concerns and will review and modify this bill in order to gain more supporters when the Senate votes on it.

Credit Reform the Bill Addresses

The legislation addresses various credit card practices that under current law is deemed permissible. The bill will create guidelines when and how credit card companies can increase interest rates and how often. The legislation will set limits and guidelines on how fees can be charged. The bill goes on to further detail how individuals under the age of twenty one can acquire credit cards.

Opinions on How Proposed Reform Will impact the U.S. Economy

This bill has not been received well by bankers whom view this as an attempt to micromanage their industry.  Bankers view that the result of these actions will restrict credit into the economy. Consumer groups on the other hand see this as a way in which to curb credit card companies from issuing credit cards to people who can not afford to pay their debts. In the next coming months as this legislation evolves it will perhaps become clear on how this credit reform can benefit or hurt America's financial institutions.

Source: CreditFast.com