Credit Card legislationLegislation to rein in credit card practices and eliminate sudden rate hikes and late fees that have entangled millions of Americans moved closer to becoming law Thursday, bolstered by presidential pressure and the backdrop of economic calamity.

Measures before the House and Senate are designed to enhance protections for credit card customers. The House debated a bill that would prohibit so-called double-cycle billing and retroactive rate hikes and ban the issuance of credit cards to people under 18, but wouldn’t take effect until a year after enactment. Another requirement in the bill, that customers receive 45 days notice before their interest rates are increased, would go into effect in 90 days.

Double-cycle billing eliminates the interest-free period for consumers who move from paying the full balance monthly to carrying a balance.

Similar regulations by the Federal Reserve don’t take effect until July 2010.

The House measure, dubbed the “Credit Card Holders’ Bill of Rights,” was expected to garner bipartisan support and passage Thursday. Yet some opposition was evident.

In debate on the House floor, Rep. Pete Sessions, R-Texas, said the legislation could prompt lenders to restrict credit in an already tight market to compensate for the new requirements. That would choke off credit for consumers relying on it to meet needs in tough economic straits “and small businesses that count on this credit,” Sessions said.

That’s the leading argument made by banking industry executives against the legislation.

Supporters of the bill also drew on the economic crisis to make their case.

“Americans deserve a fair shake,” said Ed Perlmutter, D-Colo. The credit card industry “has taken advantage of millions of vulnerable Americans.”

Boosters of the bill are tapping into rising public anger over corporate excesses and the conduct of banks and other companies receiving billions of dollars in taxpayer money.

“At a time when millions of families continue to struggle to make ends meet, additional safeguards are needed to ensure consumers are not being saddled by questionable industry practices,” the powerful AARP, the lobbying group representing seniors, said in a statement supporting the House bill.

Prospects for a similar measure in the Senate also appear promising.

“I will continue to fight to ensure that the bill we send to the president includes robust protections for students and other young consumers, a ban on retroactive rate increases, a fair allocation of payments and tougher penalties for companies that violate the law,” Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said in a statement.

The Obama administration has been pressing for passage of the legislation, which would bring unprecedented new rules for the industry that consumer advocates and some Democrats have unsuccessfully sought for years. President Barack Obama met at the White House last week with executives of the credit card industry and made clear he wants to sign a bill into law. He reaffirmed it as a priority at his prime-time news conference Wednesday evening, saying legislation was a must to protect consumers from “abusive fees and penalties.”

Earlier Wednesday, Treasury Secretary Timothy Geithner and Rep. Carolyn Maloney, D-N.Y., the House bill’s chief sponsor, met with representatives of consumer and civil rights groups to discuss the credit card overhaul.

The administration’s efforts to revive lending and the economy will be complemented by an overhaul of the nation’s financial rule book to avoid a recurrence of the economic crisis while protecting consumers and investors, Geithner said. “We need to change the rules of the game” to make the credit card business more transparent, fairer and simpler for consumers, he told reporters after the meeting at the Treasury Department. “This administration and this Congress are committed to changing the system.”

The administration is advocating stricter practices that could crimp banks’ revenue at the same time the government is shoring up the financial institutions with hundreds of billions of dollars in bailout aid.

The credit card changes could cost the banking industry more than $10 billion a year in interest payments, according to a study by the law firm Morrison & Foerster.

Amid the recession and rising job losses, consumers — even those with strong credit records — have been defaulting at high levels on their credit cards. Banks already battered by the mortgage and credit crises have been bleeding tens of billions in red ink from the losses.

U.S. credit card debt has jumped 25 percent in the past 10 years, reaching $963 billion in January, according to figures from the White House. The average outstanding credit card debt for households that have a card was $10,679 at the end of 2008, according to CreditCard.com, an online market.

Copyright 2009 The Associated Press.