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.

Last chance to give the government your opinion on overdraft fees

If you charge more on your debit card than you have in your bank account, your bank will likely cover the difference and bill you later.

The bank will probably charge you an "overdraft service" charge for it, but it sounds like a nice thing for the bank to do, right?

Well, yes, but when did you agree to pay for that service?

Most banks don't ask, enrolling customers automatically, and the service charges can really add up. So, if you buy a $4 cup of coffee with your check card and you only have $3 in your account, the bank can hit you with a $34 overdraft fee.

A lot of consumers and consumer advocates out there--including our publisher, Consumers Union--think that's just not right.

The Federal Reserve Board has proposed a rule change to give bank customers the option of opting in or out of overdraft service.

The Fed has also given you a chance to speak your mind on the issue, but that opportunity is about to end. Consumers have until Monday, March 30 to speak up.

If you'd like to have your say, Consumers Union's has an online form to submit your comment to the Fed.

Congressional hearings tackle consumer credit issues

More and more of us having trouble paying the bills--whether they're from the mortgage, credit cards, or car loans--and it doesn't look like there is a bailout in store for individual consumers. But all of our tough times being talked about in Washington.

Today two Congressional hearings tackled the problems consumers are having in this recession. A House subcommittee examined "Consumer Credit and Debt: The Role of the Federal Trade Commission in Protecting the Public,” while a Senate subcommittee took on “Abusive Credit Card Practices and Bankruptcy.”

The head of the FTC told the House Subcommittee on Commerce, Trade, and Consumer Protection that his agency is trying to protect regular folks, but it needs more funding and more authority.

"The agency has used its traditional consumer protection tools of law enforcement, broad-based research and policy development, and consumer and business outreach to provide important protections for consumers of financial services," FTC Chairman Jon Leibowitz said. "However, the Commission must do more. To enable the FTC to perform a greater and more effective role protecting consumers, it recommends changes in the law and resources to enhance its authority to promulgate needed rules, prosecute cases against law violators, and conduct critical research. If given more authority, the Commission certainly will use it to protect consumers."

The Senate hearing focused on one area of personal finance over which the FTC chief said his agency had very little authority: credit cards.

Senators on the Judiciary Subcommittee on Administrative Oversight and the Courts heard about how credit card companies--some of which have taken billion-dollar bailouts from the government--are treating their customers.

"The standard credit card agreement gives the lender the power to bleed their customer through evolving and ever more crafty trick and traps," Sen. Sheldon Whitehouse said. "Under this business model, the lender focuses on squeezing out as much revenue as possible in penalty rates and fees, pushing the customer closer and closer to the edge of bankruptcy."

Whitehouse is sponsoring legislation that would limit interest rates that credit card companies can charge consumers who are in bankruptcy proceedings.

The proposal would change bankruptcy laws to dissolve claims for repayment of debt carrying interest over a certain level, now 18.5 percent, according to the Associated Press. It could affect millions of dollars in claims made by credit card companies from consumers who have filed for bankruptcy protection.