The credit card industry suffered a rare defeat today.
In a 90-5 vote, the Senate passed legislation to sharply curtail the ability of credit card issuers to raise interest rates and charge fees. A similar bill passed the House April 30.
President Obama had made credit card reform a major White House push this spring, saying he wanted to sign a bill by Memorial Day.
The Senate bill allows rate hikes only if a borrower is 60 days or more late with payment. Card companies would be required to restore the original rate if the customer paid on time for the next six months.
The House bill mirrors Federal Reserve regulations approved in December and bans “unfair and deceptive” practices.
Christopher Dodd (D-Conn.), author of the Senate bill, called his legislation “a victory for every American consumer who has ever suffered at the hands of a credit card company.”
The credit card industry warns, however, that the move may backfire, making it harder for consumers to get credit cards.
In addition, the New York Times reported today that banks may now turn their sights on consumers with good credit, reviving annual fees, curtailing cash-back offers and other rewards programs and eliminating interest-free grace periods.
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