WASHINGTON - President Barack Obama has signed a bill creating new rules for the credit card industry that are designed to protect consumers from surprise charges.
Obama signed the legislation Friday at a White House ceremony in the Rose Garden. The overhaul was opposed by many financial companies, but cleared Congress with broad support.
The president said the legislation aims to help trapped consumers get out of the "one-way street" that credit often becomes. He urged people to act responsibly, and not buy more than they can afford, but said change was needed to force credit card companies not to take advantage.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) - New rules for the credit card industry that are designed to protect consumers from surprise charges, such as over-the-limit fees and costs for paying a bill by phone, are part of a bill President Barack Obama is set to sign into law.
Obama plans to sign on Friday an overhaul of credit card regulations that he blames in part for the economic downturn. Despite opposition from financial companies, the bill cleared Congress with broad support.
"These are important reforms to protect consumers and to bring some commonsense rationality into our financial system, and the president looks forward to signing it as quickly as possible," White House spokesman Robert Gibbs said.
The new rules, which would go into effect in nine months, would prohibit credit card companies from giving cards to people under 21 unless they can prove they have the means to pay the debt or a parent or guardian co-signs for the card.
Under the bill, a customer would have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance. Even then, the lender would be required to restore the previous, lower rate if the cardholder pays the minimum balance on time for six months.
Consumers also would have to receive 45 days' notice and an explanation before their interest rates increased.
Last year, the Nilson Report estimated that more than 700 million credit cards were in circulation in the United States. That's more than two cards for every man, woman and child.