Obama meets with credit card executives, promises reform

President Barack Obama called his Thursday meeting with top executives from the nation's largest credit card companies "constructive," and then he said he would do what he could to change the way those companies do business.

"We had a discussion with some of the top issuers here, and what I communicated to them is that I think credit cards are an important convenience for a lot of people ... so we want to preserve the credit card market," Obama said. "But we also want to do so in a way that eliminates some of the abuses and some of the problems that a lot of people are familiar with--people finding themselves starting off with a low rate and the next thing they know their interest rates have doubled; fees that they didn't know about that are suddenly tacked on to their bills; a whole lack of clarity and transparency in terms of the terms and conditions of their credit cards."

The White House will work with leaders in Congress who have already introduced credit card reform legislation, the president said. On Wednesday a House committee approved a bill that would limit credit card rates and fees. A Senate committee approved similar legislation a few weeks before.

Obama set out four points which his administration would work to change:

1. "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."
2. "All the forms and statements that credit card companies send out have to be written in plain language and be in plain sight.  No more fine print, no more confusing terms and conditions.  We want clarity and transparency from here on out."
3. "We have to make sure that people can comparison shop when it comes to credit cards without being afraid that they're going to be taken advantage of.  So we believe that it's important to require firms to make all their contract terms easily accessible online in a fashion that allows people to shop for the best deal for their needs."
4. "We think we need more accountability in the system.  And that means more effective oversight and more effective enforcement so that people who are issuing credit cards but violate law, they will feel the full weight of the law."

Learn more from Consumer Reports about credit card rates that jump overnight.

And, learn the dark secrets of debit cards.

Comments

[Izzy]

It's about time that someone does something about the credit card abuse. Credit card companies are out of control. I am paying 29.99% on my cards because they claim that everyone else is doing the same. My credit was cut to the balance amount, now it reflects as if I have maxed out the credit limit.
I don't agree much with Obama but on this he has all my support.

[Izzy]

credit cards are modern day loan sharks.

[Maureen]

What people keep forgetting about the high interest rates of credit cards is that the debt is unsecured - unsecured debt generally carries a high rate of interest because there is nothing of value that can be repossessed if the credit card is in default. What will you give back? - the two-week vacation that you took with your family 3 months ago, the dinner for four a month ago, the gas you put in your car, the $600 boots you have worn for the last 6 months - all of those things are consumables that have NO VALUE once you have used them!! The trade off with credit cards is in return for letting you purchase things that have no value, you will be charged high interest rates.

The only result of governments in any country attempting to control credit card rates or to cap them is that the credit card companies will limit who can get a card - likely only businesses and individuals with gold plated credit ratings. So those of you who are out there living off your credit cards - that credit will be withdrawn and you will be up the creek and the economy as a whole will suffer because people will not be able to buy all the stuff they want. People, make up you minds about how you want to spend you money - it is your money after all. But looking for governments to bail you out all the time is just childish.

[Kevin Lafayette]

Lets be clear, President Obama does not want to run GM, that is why he fired the CEO of GM. I wonder if he does not want to run the credit card business in the same way?

[Dizzy]

Izzy,

Maybe you should not be buying things you cannot afford.

[Citizen Wilson]

If ya don't like the way credit card companies operate, don't use them! Pay cash or use a debit card!

[John West]

No is forced to use a credit card.

The numbers are plain and simple ... they reflect what you owe and what the amount of interest is each month.

What part of that can't Americans understand?

Deep indebtedness is a life-style choice, not a necessity.

[Ray K.]

Izzy, you are paying 29.99% on your cards because you voluntarily signed up for it - no other reason.

[DanT]

Give me a break! You chose to get that CC and you chose to buy stuff you could not afford. You are personally responsible for your situation and to resolve it. It's not the CC companies fault and not the Goverments role to solve your problems.

[RSP]

Excellent comment, Maureen. I fear, however, that when the CC companies become more selective in extending credit, Democrats will do to them what they did to the banks under Clinton: pressure them to loan money to the unqualified.