Reporting from Rio Rancho, N.M. — President Obama today called on Congress to send him a bill by Memorial Day that would curb what he described as abusive credit card practices in which lenders raise interest rates and slap consumers with high fees.
Obama said such industry tactics are exploitative and need to be stopped through new legislation.
"You should not have to worry that when you sign up for a credit card you're signing away all your rights," the president said at a town hall-style meeting in a high school gymnasium here.
Legislation aimed at preventing credit card companies from mistreating customers is moving through Congress. On a separate track, the Federal Reserve is coming out with new rules next year that would strengthen protections for those who use credit cards.
Obama met last month with representatives of the credit card industry, urging them to adopt more fair-minded practices amid the economic downturn.
Describing that meeting to an audience of 2,300 here, the president said, "We didn't agree on anything." Correcting himself, he said, "We didn't agree on everything -- that was a slip of the tongue."
Obama decried practices such as promising people low interest rates "while keeping the right to raise those rates at any time for any reason -- even on old purchases."
Introducing the president was an Albuquerque resident who conveyed a frustrating encounter with her credit card company. The woman, Christine Lardner, has two daughters in college.
Pinched financially, she and her husband have started using a credit card to pay some college expenses. When the card neared its limit, they contacted the school and tried to switch to another card, but it was too late. After the old card was mistakenly charged, the credit card company tripled their interest rate -- to nearly 30%.
Lardner had sent a letter to the White House describing her predicament, leading to her appearance at the event today. Obama said he empathized.
He laid out principles he believes to be important in creating a more responsible credit card industry. One was transparency. He said no one should need specialized legal expertise to understand the fine print of a credit card contract.
"We're going to require clarity and transparency from now on," he said.
Obama added: "Enough is enough. It's time for strong, reliable protections for our consumers."
According to the White House, total credit card debt has reached $963 billion, a 25% jump over the last 10 years. The average amount of credit card debt among families holding a balance was $7,300 in 2007.
Penalty fees comprise a fair chunk of industry revenues. Credit card issuers collect $15 billion each year in penalty fees, amounting to 10% of total revenues.
Obama also stressed that consumers may need to rethink spending practices.
"This is not free money; it's debt," he said. "And you shouldn't take on more than you can handle."
peter.nicholas@latimes.com
