Obama's pledge to curb sharp credit card practices gets bill moving in US Congress

21 May 2009

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.