If  you are a proponent of Big Government, then the U.S. Senate’s recent action designed to limit the practices of credit card providers doesn’t come as any surprise to you. In fact, you probably will be welcoming the day that President Obama signs the legislation into law, an event expected to take place as the House and Senate versions are reconciled.

Special Rights For Cardholders

The legislation, dubbed the Credit Cardholders’ Bill of Rights Act of 2009, was put together to counter what some have been saying is are abusive practices by credit card companies over the past several months. In particular, since the economy began its free fall last September, card companies have tightened lending, raised interest rates, cancelled accounts and raised certain fees.

These moves, which come on top of job loss, personal bankruptcy, foreclosures and other consumer challenges, have raised the ire of consumer activists although by current law these practices are in fact legal.

Support From Both Parties

The bill passed 90-5, representing strong bi-partisan support. Some political analysts have suggested that widespread support was needed especially from those politicians who are up for election in November 2010. With the election cycle beginning in January, few are of the mind that voting against the bill won’t be something that beseiged voters will soon forget.

Credit card companies will have nine months from the time that the bill becomes law to make the changes stipulated in the bill. As the bill now stands it restricts high interest rates; requires lenders to give advanced notice before raising rates; prevents high “over limit” fees; allows customers to pay bills via phone or online without added fees; and requires lenders to post credit-card agreements online.

America’s Bankers Raise Concerns

Bankers aren’t thrilled with the bill for reasons beyond the obvious restrictions which favor consumers. Most say that the legislation will make credit harder to obtain, as fewer lenders will be willing to assume the risk that goes with what is essentially an unsecured loan.

Specifically, American Bankers Association president and CEO Edward L. Yingling said, “Credit cards are a strong economic driver and are relied upon by consumers and small businesses to make payments and to bridge short-term financial gaps.  The goal in the legislation should be to obtain the right balance:  providing protections, while maintaining the important role of credit cards in providing loans to consumers and small businesses.  Unfortunately, we believe the bill does not achieve that balance and will therefore cause an unnecessary decrease in credit availability.”

Change On The Way: In Nine Months

Consumers should be aware that most of the required changes will not happen immediately. As mentioned earlier, it will take nine months from the time that President Obama signs the bill into law before the provisions of the bill must kick in.

Adv. — Are you shopping for a new credit card? Pending legislation changes will be making obtaining a credit card more difficult as credit tightens. Apply today for a new credit card, including prepaid cards and reward cards.

Tags: borrowers, consumers, credit card agreement, credit card fees, Credit Cards, lenders, President Obama, U.S. House, U.S. Senate