U.S. House Easily Passes Credit-Card Bill

Credit-card reform legislation passed a critical hurdle Wednesday when the House of Representatives voted 361-64 to approve a bill to protect consumers from surprise interest rate hikes, excessive fees and other practices roundly criticized as unfair and deceptive.

The vote came a day after the U.S. Senate approved the same credit card protections by an overwhelming 90-5 bipartisan vote. The legislative actions make credit card reform a lock since President Barack Obama has championed protecting consumers from credit card "traps."

"Consumers will have more money to invest in the economy instead of paying off debt," Rep. Carolyn Maloney, the New York Democrat who sponsored the House credit card bill, said just before the vote. "Americans want this bill."

The bill limits when interest rates can be hiked and requires 45 days' advance notice of significant changes in card terms -- measures designed to take the surprise out of credit card agreements. Retroactive interest rate increases will be banned except when the cardholder is more than 60 days late paying a credit card bill, when promotional or "teaser" rates expire, when the account has a variable interest rate and when the card user reneges on terms of a workout plan for debt repayment. Interest rates cannot increase during the first year of a new card account.

The president is expected to sign the bill into law by week's end. The new law won't provide immediate relief for millions of American families struggling to pay mounting credit card debt. The bill calls for phasing in credit card protections, with the earliest mandate -- giving consumers 45-day advance notice of significant changes in credit card terms -- starting 90 days after enactment, or by the fall. The bulk of the credit card restrictions kick in nine months after Obama signs the bill into law -- or by February 2010.

New credit card rules approved by the Federal Reserve and other regulators in December 2008 include many but not all of the same consumer protections. Those rules are not mandatory until July 1, 2010 -- allowing card issuers lead time to revamp their computer systems and business models to accommodate the changes.

Other provisions of the bill include: