Business

House takes aim at credit card fees

The House voted on Wednesday to accelerate the enactment date of tough new rules for credit card companies after voters complained of a rise in interest rates and steep new fees.

The bill, approved 331-92, would force lenders to comply with the new rules immediately unless they agree to freeze interest rates and fees.

The proposal's chances in the Senate were dim, where several lawmakers worried that a short deadline would hurt the industry and limit the availability of credit. But the House vote served as a warning shot to big banks that many lawmakers were fed up with reports of price gouging.

Last spring, Congress passed legislation that would protect debt-ridden consumers from many of the surprise changes that have become common in the industry. President Barack Obama signed that bill into law in May, and most of the new rules will take effect on Feb. 22, 2010.

Under the new law, lenders won't be able to increase suddenly rates on existing balances unless a person is more than 60 days behind on a payment. Banks also couldn't give cards to people under 21 unless a parent co-signed or the cardholder could prove he had the means to pay back the loan.

To assuage concerns in the Senate that the restrictions were too onerous, Democrats gave banks nine months to prepare for the changes.

But lawmakers say that many credit card companies have used the grace period to hike rates. According to a recent Pew study, even the lowest interest rates offered on most bank cards have jumped by more than 20 percent since last year.

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