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President Obama sat down with executives from 14 major credit card companies on Thursday, saying he wants new rules to protect consumers against abuses.
"People finding themselves starting off with a low rate and the next thing they know their interest rates have doubled, fees that they didn't know about that are suddenly tacked onto their bills," said /*President Obama*/.
Consumers like San Francisco's David Spahn know all about it.
"Lo and behold they wanted $300 and some odd dollars in interest and finance charges, and I said what's this?" said Spahn.
The rate on David's Advanta card suddenly almost quadrupled from eight percent to 30 percent without warning.
"They just raised and that was it like it or lump it," said Spahn.
By law, banks can raise interest rates and fees for no reason whatsoever. The president doesn't like that, and on Thursday he said he'll push for new rules.
Congress is already considering new legislation making it harder for banks to raise interest rates, increase fees and suddenly change the terms of your contract.
"There has to be strong and reliable protections for consumers protections; protections that ban unfair rate increases and forbid abusive fees and penalties. The days of anytime, any reason rate hikes and late fee traps have to end," said President Obama.
Consumer Action's Joe Ridout has been pushing for faster reform.
"Obama can't lay down credit card reform himself, but he can lay down the bully pulpit to call for legislatures to adopt responsible regulation," said Ridout.
Consumer Union's Gail Hillebrand praised the president's action.
"As a combination of today's meeting, the incredible public anger about the fact the banks are still engaged in business as usual and the bills now in Congress I think we will see credit card reform," said Hillenbrand.
The /*American Bankers Association*/ says if credit card companies can't raise rates without cause. If they can't change due dates and minimum payments for no reason the economy will suffer.
In a statement, they said: "The Federal Reserve itself has indicated these rules are likely to shrink credit availability and result in increased rates for some consumers. The goal of any additional efforts should be to achieve the right balance between enhancing consumer protections and ensuring that credit remains available."
Wells Fargo was less combative issuing its own statement that said: "We look forward to working closely with the President and Congress to fashion legislative reforms that help our customers succeed financially, manage our risk and fuel economic recovery."
Consumers told /*7 On Your Side*/ they just want a fair deal from their credit card company.
"I don't know any other company in the U.S. where you can write a contract with them, and they can continue to change the terms of the contract any time they want," said Spahn.
The Federal Reserve has already approved a new credit card bill of rights for consumers. But it won't take effect until July 2010. The president says he'll push to get those reforms and more enacted sooner. We'll be keeping an eye out.
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