Our Changing Globe

The U.S. House of Representatives passed by a vote of 357-70 today, a so-called ‘credit-card bill of rights’ bill, following the adding of a provision that will require banks to apply consumers’ payments to balances with the highest interest rates first.

Uncollected credit card debt rose to 8.82% in February, and that’s the highest amount registered by Moody’s Investors Service Inc. since it began keeping records twenty years ago.

The legislation will also require credit-card companies to give forty-five days notice before increasing rates, and require statements to be mailed at least twenty-one days before the payment due date, and the provision will take effect ninety days after the measure is signed into law.

The House bill imposes broader restrictions than those enacted by the Federal Reserve in December, leading House Speaker Nancy Pelosi to say, “Very soon this will be the law of the land, and consumers will benefit. The House action today will give the legislation momentum heading into the Senate, and with a Democratic president who will sign final legislation there is little doubt it will get support needed in both chambers”.

The senior Republican on the House Financial Services Committee, Spencer Bachus, voiced concern however saying, “Too many restrictions will lead lenders, such as Bank of America Corp. and Citigroup Inc., to pull back on credit in the midst of a severe economic decline. Credit cards play a crucial role in the life of ordinary Americans. Any legislation affecting credit-card practices is going to have a profound effect. There are a great number of people whose rates will go up”.

Edward Yinglingm, who is the President and Chief Executive Officer of the American Bankers Association said in a statement, “It is vitally important to maintain access to credit at this difficult economic time. This is especially true for credit cards, which serve as a driver of economic activity and are relied on by consumers and small businesses as way to bridge short-term financial gaps”.

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2. The Average Interest On U.S. Credit Cards Is Now 14.2%
3. Are Low Interest Rates The Same As Tax Cuts?
4. Some Good News About Mortgages
5. Our Economy – When Even The Ugly Looks Pretty.