House committee votes to speed up credit card reforms

Legislation that could help more Americans manage their credit card debt took a step closer to becoming reality this week on Capitol Hill.

A proposal currently pending in Congress would speed up the implementation of various credit card reforms that were already approved this year, ranging from limits on the late fees and interest rates consumers are saddled with for late payments, to ways cards can be marketed to college students.

Existing law calls for these reforms to take effect in late February. However, some members of Congress have been dismayed by what they see as unfair behavior towards consumers as they take some final measures to boost their profit margins in advance of the new law. With that in mind, the current bill would move the effective date of the reforms up to December 1.

Earlier this week, Federal Reserve Chairman Ben Bernanke advised against the proposal, saying that lenders still need sufficient time to implement new policies and resolve any regulatory and compliance issues that will be raised by the new reforms.

However, members of the House Financial Services Committee apparently disagreed, and unanimously voted to speed up the reforms. With the committee vote now accomplished, the legislation is set to move on for a full House vote, after which it will await Senate action.

"Just in time for the holidays, Congress can lock in a ban on interest rate hikes on existing balances and the tricks that have kept far too many consumers trapped in a never-ending cycle of debt: tricks like double-cycle billing, due-date gamesmanship, and applying payments to lowest rates first," said Congresswoman Carolyn Maloney, a New York Democrat who is sponsoring the measure, after the vote.

Supporters of the reforms point out that consumers will get some badly-needed help when it comes to managing credit card debt, while the industry has opposed the bill, maintaining that people also need to be responsible for their own spending decisions.