Obama Pushes For Credit Card Legislation
MELISSA BLOCK, host:
And now to President Obama's town hall meeting in Rio Rancho, New Mexico. The president said enough is enough when it comes to credit card companies charging hidden fees and jacking up interest rates. The Senate is nearing a final vote on credit card legislation. NPR's Scott Horsley has been traveling with the president.
SCOTT HORSLEY: Many of those in the audience today at Rio Rancho high school outside Albuquerque had written to the president to complain about the way credit card companies had treated them. Mr. Obama noted that credit card debt has jumped 25 percent over the last decade. And he said complaints about unfair treatment have only gotten louder during the recession, when people can least afford it.
President BARACK OBAMA: There are Americans struggling to cope with the rising cost of putting things like their mortgage, their tuition and medical bills, even their food and gas bills on their credit cards because they feel like they're going under water. But they're quickly finding out that they can't dig their way out of debt because of unfair practices.
HORSLEY: Christine Lardner's(ph) husband owns a struggling small business in New Mexico and the couple's been using credit cards to help pay for their daughter's college tuition. Lardner said she's always been careful not to exceed her credit limit but a mistaken charge by the college billing office pushed her over the line.
Ms. CHRISTINE LARDNER: I would have expected that a charge this size would have been declined by the credit card company. Instead, they authorized the charge and I was told by phone that this was because of our good credit and to save me the embarrassment of being declined. Well, I don't know about you, but I would have preferred to be declined.
(Soundbite of applause)
HORSLEY: Lardner, who introduced the president at the town hall, said after she went over the limit, her credit card company tripled her interest rate to nearly 30 percent. Mr. Obama said while it's important for consumers to be responsible in their spending habits, credit card issuers have not been playing fair.
Pres. OBAMA: Yeah, we're lured in by ads and mailings that hook us with the promise of low rates while keeping the right to raise those rates at anytime for any reason, even on old purchases, even when you make a late payment on a different card.
HORSLEY: The Senate is close to voting on a bill that would make it harder for credit card companies to raise interest rates on customers' existing balances. The House has already passed a similar measure and the Federal Reserve is planning to impose its own rules on credit card companies next summer. The credit card issue represents an opportunity for the president and lawmakers to show how they're working to protect Main Street during the recession, not just Wall Street.
According to the Federal Reserve, 44 percent of American families carry a balance on their credit cards and half of those owe at least $3,000. In addition to limiting arbitrary rate hikes, Mr. Obama wants to make credit card contracts easier to understand and give consumers more tools to find a card that meets their needs.
Pres. OBAMA: You should not have to worry that when you sign up for a credit card, you're signing away all your rights. You shouldn't need a magnifying glass or a law degree to read the fine print that sometimes don't even appear to be written in English or Spanish.
(Soundbite of applause)
HORSLEY: The credit card industry warns the proposed legislation could backfire, making it harder for some consumers to get credit and making others pay more for it. There are signs the industry is already raising interest rates across the board. A congressional committee reported this week that the average interest rate on credit cards jumped by a full percentage point in the first two months of this year, even though the Federal Reserve had lowered banks' own borrowing costs in December.
Scott Horsley, NPR News, Rio Rancho, New Mexico. Transcript provided by NPR, Copyright NPR.
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