Obama Meets With Credit-Card Chiefs
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
President Obama met with some of the nation's biggest issuers of credit cards today. He called on them to eliminate practices that he says are abuses, among them, surprise rate hikes and confusing language on credit agreements. The president spoke as both chambers of Congress consider measures to limit card companies' freedom to raise rates. Mr. Obama said that he would support what he called common sense legislation.
NPR's Brian Naylor reports on just what that legislation might look like.
BRIAN NAYLOR: Some 80 million Americans hold credit cards and as times have gotten tougher the president has been hearing complaints from consumers about banks and other issuers of the cards. After meeting with more than a dozen executives from some of the biggest credit card companies, Mr. Obama outlined some of those complaints.
President BARACK OBAMA: People finding themselves starting off with a low rate and the next thing they know, their interest rates have doubled, fees that they didn't know about, but are suddenly tacked onto their bills, a whole lack of clarity and transparency in terms of the terms and conditions of their credit cards.
NAYLOR: The president said credit cards are an important convenience to consumers and a key source of short term funds for many small business people. So he said his administration will be backing reform efforts in Congress, but that he also wanted the input of the card issuers. Mr. Obama set out what he called a set of core principles for any overhaul of the credit card system starting with what he called strong and reliable protections for consumers.
Pres. OBAMA: Protections that ban unfair rate increases and forbid abuse of fees and penalties. The days of any time, any reason rate hikes and late fee traps have to end. Number two, all the forms and statements that credit card companies send out have to be written in plain language and be in plain sight. No more fine print, no more confusing terms and conditions. We want clarity and transparency from here on out.
NAYLOR: Separate bills are working their way through the House and Senate. The so-called Credit Cardholders Bill of Rights cleared the House Financial Services Committee yesterday with bipartisan support. It would prevent card companies from arbitrarily raising interest rates on unpaid balances and from unfairly penalizing cardholders who make their payments on time. The Senate bill is considered even tougher on card issuers. The Federal Reserve Board has also weighed in, issuing stringent rules on card companies.
But those new regulations won't take effect until over a year from now. Joel Kelsey, a policy analyst with Consumers Union, says that in the meantime, card issuers are quickly hiking rates and fees.
Mr. JOEL KELSEY (Policy Analyst, Consumers Union): This action needs to happen sooner rather than later. The economy is in a crisis now. Families are hurting now. And instead of trying to reach into their pockets to balance their budgets, the credit card companies need to find other ways of righting their economic ship.
NAYLOR: The credit card industry said it wants to work with the Obama administration, but it also criticized the legislation approved by the House panel yesterday, saying it will make lenders less able to offer reasonably priced credit to consumers and that it could make matters worse for the broader economy.
Brian Naylor, NPR News, the White House.
SIEGEL: Have you been surprised by recent changes in your credit card terms? Or maybe you've just been having trouble making sense of all that fine print. Well, we are betting that a lot of you have questions about this issue, and we'd like to hear them. Just go to npr.org and click on Contact Us and be sure to write, credit card, in the subject line.
Next week we'll bring in Joan Goldwasser. She covers the credit card industry for Kiplinger Personal Finance. And she will answer some of your questions and walk us through the finest of that fine print.
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