President Barack Obama says changing the way credit card companies bill customers is critical to fixing the nation’s ailing economy.
Obama on Thursday addressed a town-hall meeting in New Mexico where he heard Americans’ stories about credit card abuses. He says the economy can’t recover while people are putting basic needs such as food and shelter on credit cards from companies that don’t play fair.
The president is pressing for legislation that would end some credit card industry practices deemed abusive, such as sudden interest rate hikes and late fees. He says the economic crisis is the result of people living beyond their means and credit companies’ poor behavior.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
ALBUQUERQUE, N.M. (AP) — President Barack Obama is continuing to press for legislation to protect consumers by ending some credit card industry practices deemed abusive, such as sudden interest rate hikes and late fees.
He has demanded that Congress send him a bill by Memorial Day.
Keeping the pressure on lawmakers, and the industry, Obama was holding a town hall-style meeting here Thursday with consumers who are eager to tell him how they think they have been mistreated by the companies that allowed them to buy now and pay later.
The House has approved a bill to enact some of the protections Obama seeks; a slightly different version is pending in the Senate, where a vote could come as early as this week.
Both measures would ban retroactive interest rate increases on previous balances, and require that customers be given 45 days notice before their rates are hiked. The bill also would stop companies from giving a credit card to anyone as young as 18.
The issue is a top one for Obama, particularly as the recession continues and consumers complain about being abused by credit card issuers. Nearly 80 percent of U.S. households have a credit card, and just under half carry a balance, according to the White House.
Obama discussed the bill in his radio and Internet address last Saturday. He also had industry representatives come to the White House for a meeting last month.
“Americans know that they have a responsibility to live within their means and pay what they owe,” Obama said last week. “But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties and hidden fees that have become all too common.”
The industry isn’t sitting quiet, however.
The American Bankers Association has warned senators that the measure could backfire by restricting credit for consumers at a time when they need it the most.
The industry also argues that new rules by the Federal Reserve, scheduled to take effect in July 2010, address many of the concerns expressed by Obama and members of Congress.
Obama’s audience at Rio Rancho High School will include several dozen people who have expressed their frustrations about their credit card companies in letters and e-mails to the president, the White House says.
Copyright 2009 The Associated Press.