Earlier today, President Obama met with top executives from some of the biggest credit card companies in the nation as part of comprehensive effort to reform credit card regulations. The plan seeks to curb abuses -- making sure that terms of use are clear, preventing unexpected rate hikes, and safeguarding against unfair practices.
After the meeting, President Obama said:
Credit cards are an important convenience for a lot of people. They are a source of unsecured debt for a lot of individuals and small businesses who are creating jobs; a lot of startups may use credit cards for that purpose. We think that's important, and so we want to preserve the credit card market.
But he was keen to note that new safeguards are necessary for the American consumer:
I think that there has to be strong and reliable protections for consumers -- protections that ban unfair rate increases and forbid abusive fees and penalties. The days of any time, any reason rate hikes and late fee traps have to end.
The President went on to declare that statements must be "written in plain language and be in plain sight" with "transparency and clarity." Consumers must be able to comparison shop between credit card companies, so contract terms and deals must be available online. Moreover, President Obama supported the creation of default "plain vanilla" credit cards so that every user has access to a card he or she is comfortable with. He also called for more accountability, effective oversight and effective enforcement to prevent abuses from credit issuers.
The President's meeting followed the approval yesterday of the Credit Cardholder's Bill of Rights by the House Financial Services Committee. The bill -- which targets arbitrary interest rate increases on existing balances, charging unmerited interest on debt already paid, and unfair late fees -- which likely will reach the House floor next week.
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