WASHINGTON (AP) — President Obama signed the bill that will overhaul credit card regulations and ultimately protect millions of card consumers in the U.S.
The bill contains new rules for the credit card industry that will prevent them from instituting surprise charges, such as over-the-limit fees and costs for paying a bill by phone.
Obama blames the card industry in part for the economic downturn. Despite opposition from financial companies, the bill cleared Congress with broad support.
"These are important reforms to protect consumers and to bring some commonsense rationality into our financial system," White House spokesman Robert Gibbs said.
The new rules, which will go into effect in nine months, will prohibit credit card companies from giving cards to people under 21 unless they can prove they have the means to pay the debt or a parent or guardian co-signs for the card.
Under the bill, a customer will have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance. Even then, the lender will be required to restore the previous, lower rate if the cardholder pays the minimum balance on time for six months.
Consumers will also have to receive 45 days' notice and an explanation before their interest rates increased.
Last year, the Nilson Report estimated that more than 700 million credit cards were in circulation in the United States. That's more than two cards for every man, woman and child.
Many cardholders are carrying hefty balances. According to the Federal Reserve, the nation is some $2.5 trillion in debt, a figure that does not include home mortgages.
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