Wednesday, the U.S. House of Representatives approved H.R. 627, the Credit Cardholders’ Bill of Rights, as it was adopted by the U.S. Senate on Tuesday.  The bill now awaits President Obama's signature to become law.  The bill is more stringent on issuers than the new credit card rules issued by the Federal Reserve in December.  While the Fed rules were scheduled to take effect in July 2010, many rules in this bill will take effect nine months after enactment.

Thanks in part to the grassroots efforts of ETA members and the broader work of the Electronic Payments Coalition (EPC), there were no interchange amendments added to the bill.  ETA members responded enthusiastically to the call to urge Senators to not include interchange in the credit card bill.  It is also understood that the interchange debate is not finished and will rise again in Congress this year.

The legislation will, among other things, prohibit card companies from raising interest rates on existing balances unless the borrower is at least 60 days late paying a bill. If the cardholder pays on time for the following six months, the company would have to restore the original rate. On cards with more than one interest rate, issuers will have to apply payments first to the debts with the highest rates. Before increasing rates on future purchases, the card company would have to give cardholders 45 days' notice.

Card executives have said the changes would prevent them from properly distinguishing between risky and non-risky borrowers and force them to charge everyone higher rates and annual fees.

Four provisions of the bill will interest ETA members, they are:  a government study of interchange, new gift card rules, stored value regulations, and creation of a Small Business Information Security Task Force.

The U.S. Senate voted 90-5 to approve its version of the Credit Card Bill of Rights, making it likely the measure will quickly reach the White House for President Obama's signature.

Thanks in part to a grassroots effort by ETA members and the Electronic Payments Coalition, the Senate bill does not include any language directly affecting the interchange system.

The measure makes a number of changes in the way credit card issuers must deal with cardholders, including new rules regard when and how card rates can be changed, timing of statements to cardholders and notification practices. Some of the rules already had been adopted by the Federal Reserve Bank, but would not have gone into effect until mid-2010. Others are more restrictive than the Fed's rules.

The bill now goes back to the House, where according to the Associated Press, it could come up for a vote May 20 and be sent to the White House by week's end.

The nation's ailing economy should begin to show signs of recovery by year's end, but that will be of little consolation to millions of additional Americans who will be losing their jobs well into 2010, Federal Reserve Chairman Ben Bernanke testified Tuesday before the Joint Economic Committee.

There already are flickers of hope in the economy, Bernanke said. Consumer spending grew in the first quarter. The housing market is showing signs that it has bottomed out: Mortgage rates are down; inflation is low; some large banks showed a first-quarter profit. But even if the economy continues to improve, businesses will be slow to rehire workers, Bernanke said.

That will mean a sizable job loss in coming months, even though the economy has already shed 5 million jobs in the past 15 months, he said.

The unemployment rate, which jumped from 8.1 percent to 8.5 percent in March when more than 660,000 more jobs were lost, will surge past 9 percent in early 2010, Bernanke said. The Fed expects the rate to begin to decline before it reaches 10 percent, he said. "We expect the recovery will only gradually gain momentum and that economic slack will diminish slowly," Bernanke said. In particular, businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high even after economic growth returns.