Reid: Credit card reform under way

Senate Majority Leader Harry Reid, D-Nev., on Monday said he expects bipartisan support for credit card reform legislation, citing a public backlash against unfair lending practices.

Republicans "can see the writing on the wall that people are against (abusive credit card practices)," Reid said in a phone conference with reporters.

Reid said Republicans also may be mindful of the loss of Sen. Arlen Specter of Pennsylvania, a moderate Republican who recently switched to the Democratic Party.

"You can't bet on the failure of (President Barack) Obama," Reid said.

His comments followed the announcement this weekend that Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, and ranking member Sen. Richard Shelby, R-Ala., agreed on the legislation.

The majority leader mentioned a woman who had never been late in making credit card payments and was notified that her interest rate was being increased to 17.5 percent from 9.5 percent "for no good reason."

Credit card rate increases typically are double the existing rate, said Michele Johnson, chief executive officer of Consumer Credit Counseling Service.

At the same time, credit card companies often reduce the credit line to little more than the amount owed, she said. Then, when the consumer misses a payment, the late fee pushes the total higher than the credit limit, triggering another fee, she said.

"Because of the fine print, they treat people like serfs," Reid said. "They do whatever they like with them."

Johnson said the bill would give credit card issuers incentives to more carefully evaluate customers before extending credit to them.

The congressional legislation would:

•Require credit card issuers to give customers 45 days notice of changes in interest rates.

•Ban increasing rates on cardholders in the first year after the account is opened.

•Prohibit a fee for paying credit card bills except when it entails services for expedited payments.

•Prevent credit card companies from charging fees for going over the credit limit unless the cardholder elects to allow the company to complete over-limit transactions.

•Prohibit interest expense on payments made on time.

•Require a parent or guardian to co-sign for credit cards provided to consumers under 21 years of age.

Southern Nevada is home to several credit card call centers. It's unclear whether the federal legislation would affect the Nevada centers, because it would apply to card call centers in other states, too.

"I hope that it doesn't affect employment (at credit card centers)," Reid said. "I doubt that it will."

Sen. John Ensign, R-Nev., is reviewing the bill and has not decided whether to support it, spokesman Tory Mazzola said.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.