Senate Debates Credit Card Legislation

Proposed credit-card legislation being considered in the Senate would stop card companies from raise interest rates and charging late fees, tactics used by card companies to manage rising losses in the current economy, according to Dow Jones Newswires.

 

If the legislation goes into effect, card companies may respond by increasing costs for financially responsible consumers and reducing lending practices to less creditworthy borrowers.

 

The new legislation is pending just when a number of card companies are facing large losses on skyrocketing credit-card debt as unemployment grows and the economy continues to decline.

 

The proposal also includes a bill that would that would put a cap on interest rates that banks can charge credit-card users, and a bill that would stop card companies from raising rates on existing balances unless the consumer is 60 days late on a payment.

 

An amendment also is being debated that would make it easier for retailers to give discounts to consumers who pay with cash, checks or debit cards instead of credit cards.

 

The proposal is tougher than the legislation the House passed previously and extends beyond new Federal Reserve rules that will begin in July 2010. Senators have yet to reach a final agreement.

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