Obama Makes The Credit Card Smackdown A Reality

Last Tuesday the Senate voted 90-5 to approve the bill that makes it tougher for credit card companies to raise fees and interest rates starting in the first quarter next year.

"To have the industry reaching and be as abusive to consumers, it needed to stop and it needed to change," said Senator Chris Dodd, a bill sponsor.

The bill targets credit card rate hikes and excessive fees."The President has created a strong impetus for immediate action, "said Travis Plunkett with the Consumer Federation of America.

President Obama signed the bill on Friday making it tougher for credit card companies to raise fees and interest rates.

The new law was a culmination of several years of work by consumers groups and Democrats to rein in what they say are abusive practices that prey on consumers. During the bill signing ceremony President Obama praised the new law.

Starting in February 2010 the bill will put a stop to:

- Charging consumers to pay by phone

- Sudden surges in interest rates

The bill also makes changes to:

- Applying payments made over the minimum due to balances with the highest interest rates first.

- Information in tiny print must be made clearer.

- Let consumers know how long it would take to payoff a balance if they only pay the minimum payment.

Credit card companies have been raising fees and interest rates. From November 2008 to February 2009, rates increased from an average of 12.02% to 13.08%. Because of this people have not been able to make their payments on their credit cards and are walking away from the debt.

President Obama stated the bill is not designed to protect those who are financially irresponsible, and that credit card companies do deserve to make a profit.

"We do not excuse those, and do not condone folks who have acted irresponsibly," he said.

Although, the bill is now law it doesn't go into effect until February 2010. Watch out for credit card companies trying to raise rates and charge as many fees as they can before the bill goes into effective.

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