President Obama is scheduled to sign legislation this afternoon that will place tighter restrictions on credit unions and other credit card issuers.
The bill, which passed both the House and Senate this week by lopsided margins following months of intense behind-the-scenes negotiations, restricts card issuers' ability to raise interest rates and mandates that bills be mailed out at least 21 days before they are due.
Credit unions dodged a bullet in the bill because it did not include a provision to regulate interchange fees-a key source of revenue for credit card issuers--but instead authorized a study of the issue.
The bill expands some of the regulations approved by the Federal Reserve and NCUA scheduled to take effect July 1, 2010 and several of the provisions take effect next February 22.
The bill's provisions include: requiring card issuers to reassess customers' interest rates every six months if the issuer raises an interest rate; bans raising rates unless a consumer is more than 60 days late on a bill; and a bans on both interest rate hikes on existing balances and double-cycle billing.
CUNA and NAFCU praised the provision on interchange and also said the bill will stop certain abusive practices by card issuers but also expressed concern that it could limit the ability of credit unions to manage risk and could be burdensome on smaller credit unions.