Senate Passes 'Sweeping' Legislation Which Will Tighten Restrictions on Credit Card Issuers

The U.S. Senate today passed what some are calling "the credit card Bill of Rights", a piece of "sweeping" legislation which will impose tighter restrictions on the entire credit card industry. The plan is expected to make its way to President Obama's desk by Memorial Day, which is next Monday, May 25th.

Overwhelmingly approved (90 for, 5 against), the bill uses several measures in an effort to curb abusive practices by credit card issuers, including predatory marketing to college students and teenagers.

Specifically, the legislation would ban credit card companies from hiking rates on existing card balances unless the cardholder is 60 days late on a payment. After the conumer has made 6 months of on-time payments, the credit card issuer would be forced to restore the prior, lower interest rate. Also, cardholders would need 45 days' notice prior to a rate increase and penalties would need to be "reasonable".

Companies which will be affected: American Express (NYSE: AXP), Discover Financial (NYSE: DFS), Capital One (NYSE: COF), Wells Fargo (NYSE: WFC) and JPMorgan (NYSE: JPM). Visa (NYSE: V) and MasterCard (NYSE: MA), meanwhile, will also likely be affected, but to a lesser-extent as they are strictly credit card processors.

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