Reacting to widespread anger against abusive lending practices by card issuers, the US Congres has finally acted to rein in the "accepted busines practices" of credit card lenders. (See: US Senate passes new credit card bill)

President Obama has been among the prime advocates of those keen on changing the distorted rules set by the credit card companies, and has been seeking to end the era of high lending and interest rates by US card issuers.

In April, Barack Obama had called top executives from 14 large US credit-card companies to the White House for the second time asking them to protect consumers from the abusive practices and curtail the unique powers they wield in the world of retail lending. (See: Obama again summons credit-card company chiefs)

The Pew Charitable Trust along with the Sandler Foundation conducted a year-long survey till December 2008 to address the growing concerns about abuses in the credit-card industry.

Their survey showed that between 2007 and 2008, credit-card issuers used their contractual powers to arbitrarily raise interest rates on nearly 70 million cardholders.

This resulted in cardholders paying out approximately an additional $10 billion in interest charges over and above the standard rates and fees.

For years, consumers in the US have become ever more dependent on credit cards with American Express, the largest credit card issuer in the US coining the tag line fo its cards, ''Never leave home without it.'' Today an average American does not leave home without at least 10 credit cards and a whole host of other supermarket credit cards in his wallet.

Some salient features of the bill:
The new credit card bill, passed in the House by a margin of 361 to 64 yesterday, following its adoption 90 to 5 in the Senate earlier in the week, will come into effect in nine months.

among its strongest consumer protection clauses is that credit card companies and banks will now have to give cardholders 45 days' notice prior to rasing rates on future purchases.

They will also be restricted from raising interest rates on existing balances unless the borrower is at least 60 days late paying a bill. If the cardholder pays on time for the following six months, the card issuer would have to restore the original interest rate.

The new rules also end the credit card issuers rights to arbitrarily terminate cardholder accounts - issuers will now have to give a 30-day advance notice of an account closure to a card holder.

The rules also require each periodic account statement to provide a toll-free telephone number, internet address, and website at which the payoff balance may be requested, including statements of accounts issued by a small issuer.

Credit card companies will now have to send a periodic credit card statement of account to the consumer at least 21 calendar days before the due date for the next payment on the outstanding balance.

The bill prescribes a minimum type-size and font requirement for credit card applications and disclosures. Credit card companies can no longer hide their worst deals in miniscule fine print in unreadable fonts and type sizes, as they had become accustomed to doing.

Creditor from now will lso be prohibited from treating as a late payment the receipt of a periodic payment by mail as of the creditor's next business day if the date established by the creditor as the payment due date is a day on which mail is either not delivered or is not accepted by the creditor for processing.

Most importantly, the bill prohibits extensions of credit to consumers under 18, unless the parent or legal guardian is designated as the primary account holder.

Credit card companies can no longer issue credit cards for college students who have no verifiable annual gross income or already maintain a credit card account with that creditor, or its affiliate.

Issuers are also required to obtain parental approval to increase credit lines for students for whose accounts a parent will be jointly liable and the student will need to give adequate proof of income, income history, and credit history.

The bill also prescribes procedures for issuing credit cards to full-time, traditional-aged college students. It also limits the maximum amount of credit, which may be extended to a college student for whom no one else assumes joint liability to either 20 per cent of the student's annual gross income or $500, whichever is higher.

For a working student, the credit limits will be up to 30 per cent of the student's annual gross income in the most recently completed calendar year.

While campaigning in Edinburg, Texas, during his presidential bid, Barack Obama, then a senator,  had warned students at the University of Texas-Pan American, way back in February 2008, ''Just be careful about those credit cards, all right? Don't eat out as much.'' After the foreclosure crisis, he had warned: ''credit cards are next in line.'' (See: The US braces for next crisis: Credit cards)

Credit card companies will also have to include a warning on adverse effects of excessive credit inquiries for higher limits.

Denouncing the new bill, the American Bankers Association, not surprisingly said in a statement, ''Credit cards are a strong economic driver and are relied upon by consumers and small businesses to make payments and to bridge short-term financial gaps. The goal in the legislation should be to obtain the right balance: providing protections, while maintaining the important role of credit cards in providing loans to consumers and small businesses. Unfortunately, we believe the bill does not achieve that balance and will therefore cause an unnecessary decrease in credit availability.

It added, ''Most importantly, this bill fundamentally changes the entire business model of credit cards by restricting the ability to price credit for risk. What has been a short-term revolving unsecured loan will now become a medium-term unsecured loan, which is significantly more risky.''

The association feels that the bill will have a dramatic impact on the ability of consumers, students, and small businesses to obtain and use credit cards in the future.