Obama promises protection for credit-card users

The new credit card law

The law would seek to protect consumers in this time of deep recession, without making it difficult for banks to give credit to people who need to borrow.

The Federal Reserve has already spelt out broad rules on the issue of consumer protections. But Obama wants more action and quickly. President Obama gave the principles for the legislation as follows: Protections that would save consumers from unexpected hikes in fees; that companies publish their forms in straightforward language; availability of more choice for consumers in credit-card offers; and greater enforcement so that abusers face the full rigors of the law.

Credit card companies’ response

The CEOs listened to the President’s concerns and accepted to cooperate to resolve the concerns.

Importance of credit Cards

Obama acknowledged the importance of credit cards in the US. About 80 % of U.S. households use a credit card. Credit cards are a very important source of liquidity, both for individuals, families and small businesses.

But credit-card debt has been increasing the last 10 years by 25%. According to figures released by the White House, credit card debt as of January 2009 stood at $963 billion. CreditCard.com also revealed that the average outstanding credit card debt for households was $10,679 at the end of 2008. Logically, it is the responsibility of consumers to keep themselves from borrowing excessively but consumers are not usually well-informed to make the best decision. Consumer indebtedness affect the economy as it puts a strain on availability of cash to small businesses and the vicious cycle continues.

David Swan
david.u.swan@gmail.com
http://www.thinkingmoney.org