Credit cardholders face major changes

Associated Press / May 21, 2009
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WASHINGTON - Americans will see sweeping new limits on credit card companies that try to raise interest rates or take other steps that leave consumers deeper in debt, but cardholders who pay off their balance each month could face new fees or lose out on lucrative rewards programs.

Congress wrapped up the legislation yesterday and sent it to President Obama, who plans to sign it tomorrow.

The bill will revolutionize the market by restricting when and how a card company can raise an individual's interest rate, who can receive a card, and how much time people are given to pay their bill.

In general, the new rules - which go into effect in nine months - will protect debt-ridden consumers from many of the surprise charges common in the industry, such as over-the-limit fees and costs for paying a bill by phone.

But there will be losers, too.

Banks, which oppose the legislation, will need to make up the cost somewhere, and cardholders who pay off their balance in full each month could see new annual fees and lucrative rewards programs canceled.

Some of the changes, including a requirement that cardholders receive 45-days notice before rates are raised, are on track to take effect in July 2010 under new Federal Reserve rules.

The House passed the bill by a 361-64 vote yesterday. The Senate had voted, 90-5, for the measure on Tuesday.

Included in the bill is an unrelated measure by Senator Thomas Coburn, a Republican from Oklahoma, that would allow people to bring loaded guns into national parks and wildlife refuges. The House approved that provision separately by a 279-147 vote.

The vote was a bitter disappointment for gun-control proponents, who watched as a Democratic-controlled Congress handed a victory to gun-rights advocates that they did not achieve under Republican rule.

GOP members called the current policy outdated and confusing to those who visit public lands, noting that merely traveling from state-owned parks to national parks meant some visitors were violating the law.