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Obama Calls for Reform of Credit Card Practices

President Barack Obama put his support Thursday behind a credit card law that will regulate the sudden rate increases and late fees that cause financial trouble for millions of consumers. A financial reporter mulls the state of U.S. credit and debt.

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  • JEFFREY BROWN:

    Some 80 percent of Americans now have at least one credit card. But amid a deep recession, credit card debt is getting ever harder, and many are having a tough time keeping up with payments.

    According to the Federal Reserve, more than 6 percent of all credit card debt was in default in the last quarter of 2008. And, says one private group, the average outstanding credit card debt for households tops $10,000.

  • One result:

    Credit card companies are now on the defensive, facing criticism for unfair lending practices, including raising rates on consumers as they fall further behind.

  • U.S PRESIDENT BARACK OBAMA:

    It's been out of balance.

  • JEFFREY BROWN:

    It was against that backdrop that President Obama brought 13 company executives to the White House today and told them that their practices needed to change.

  • BARACK OBAMA:

    I think that there has to be strong and reliable protections for consumers, protections that ban unfair rate increases and forbid abusive fees and penalties, that the days of any time, any reason rate hikes and late fee traps have to end.

  • JEFFREY BROWN:

    The president said that he wants the industry to be profitable and stable, but new legislation is needed to provide, among other things, clearer disclosure to consumers.

  • BARACK OBAMA:

    All the forms and statements that credit card companies send out have to be written in plain language and be in plain sight. No more fine print; no more confusing terms and conditions. We want clarity and transparency from here on out.

  • JEFFREY BROWN:

    The Federal Reserve recently ordered some new consumer protection rules, but those don't take effect until next year.

    In the meantime, pressure is also mounting from Capitol Hill. Yesterday, a House committee moved forward with a credit card holders bill of rights that would end arbitrary interest rate increases and penalties and mitigate some late fees. A similar bill is pending in the Senate.

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