US credit card sector in for major reform

Peter Baker,The New York Times,Rio Rancho:

As the Senate deliberated on legislation, Obama convened a town-hall-style meeting here led off by a woman who complained of being gouged by her credit card company. The president cited her story to make the case that banks and credit card companies have been taking advantage of loose rules to make money at the expense of hard-working Americans.
“We’re lured in by ads and mailings that hook us with the promise of low rates while keeping the right to raise those rates at any time for any reason, even on old purchases,” he told hundreds of people gathered in a high school auditorium. Appealing to popular resentment in a time of economic trouble, he cast himself as a reformer taking on a powerful industry.  “Enough’s enough. It’s time for strong, reliable protections for our consumers. It’s time for reform that’s built on transparency and accountability and mutual responsibility, values fundamental to the new foundation we seek to build for our economy,” said Obama.
The House has passed legislation imposing new limits on credit card practices, but the Senate has slowed its consideration of a similar bill. Senate aides said the bill was likely to come to the floor early next week, and it is expected to pass. The House and Senate would then have to reconcile their versions before agreeing on a final measure to send to the White House. Obama repeated his demand that Congress send it to him by Memorial Day. Credit card debt has increased by 25 per cent in the last decade, with delinquency rates up more than a third since 2006, according to statistics cited by the White House. Americans pay $15 billion in penalty fees a year, accounting for about 10 per cent of the industry’s revenues. About one-fifth of those carrying credit card debt pay more than 20 per cent in interest.
The White House arranged for an aggrieved customer who sent the president an e-mail message last week, Christine Lardner, to introduce him to the crowd here on Thursday. Lardner, an Albuquerque resident, told the crowd that she puts some of her daughters’ college costs on a credit card and when she was approaching the limit, instructed the school to switch payment methods.
By mistake, the school charged another tuition payment to her card, putting her over the limit. The credit card company then increased her rate to nearly 30 percent from 9.24 per cent.