UPDATE 2-US House backs speed-up for new credit card rules
* Limits would take effect upon enactment of bill
* Bill must go next to Senate for review and vote
* Partial escape hatch for voluntary rate increase halt
* Small issuers, gift card providers exempted (Adds Lee, Maloney, Hensarling, Frank comments, byline)
WASHINGTON, Nov 4 (Reuters) - Lashing out at large credit card companies, the U.S. House of Representatives on Wednesday approved a bill to advance the effective date for strict, new limits on card fees and interest rates.
The Democratic bill passed in a 331-92 vote that won substantial Republican support, with lawmakers citing a flood of credit card complaints from constituents.
The bill, still subject to debate and a vote in the Senate, would make the new restrictions on the card industry effective immediately upon its enactment.
It applies to the largest issuers that control over 80 percent of the credit card market.
The bill's prospects in the Senate were uncertain. For now, the effective date is not until next year.
Senator Mark Udall has introduced a companion bill. And Senate Banking Committee Chairman Christopher Dodd, a frequent critic of credit card companies, has introduced a separate measure calling for a freeze on retroactive card rate increases.
Earlier this year, Congress voted to sharply restrict card issuers' ability to raise rates on cardholders' existing balances, charge certain fees and levy unreasonable penalties. President Barack Obama signed the limits into law in May.
(For details on the new credit card rules, please double-click on [ID:nN20505135])
Some of the changes took effect two months ago. Others are not scheduled to become effective until February and August 2010.
In the interim, credit card companies have jacked up fees and rates to try to maximize revenues, said lawmakers and consumer advocates.
"The banks which pleaded for just a little extra time ... used that time to pad their profits," said Democratic Representative Barbara Lee during debate on the House floor.
The Pew Safe Credit Cards Project, a research group, said last week in a report that it had found "widespread use of 'unfair' and 'deceptive' credit card practices, despite passage of legislation to end their use."
The Pew report said, "Some of these practices have actually gotten worse since the law was passed." It said banks have raised interest rates an average of 20 percent since January.
Representative Carolyn Maloney, Democratic author of the bill to move up the rules, said, "The credit card companies brought this on themselves. ... Consumers are justly outraged."
Republican Representative Jeb Hensarling said the bill could lead to card issuers restricting credit to consumers and small businesses at a time when the economy cannot afford it.
Some major card issuers include Bank of America (BAC.N), Citigroup (C.N), Capital One Financial (COF.N), JPMorgan Chase & Co (JPM.N), and American Express (AXP.N).
The bill offered large issuers a partial escape hatch if they voluntarily halt interest rate increases through Feb. 22.
Issuers that do so could keep the Feb. 22 implementation date for a new rule that requires them to apply customer payments to the highest-rate balance owed.
Small credit card issuers and gift card providers were exempted from the rules speed-up.
Another amendment added on the House floor called for a nine-month moratorium on increases in annual percentage rates, fees, finance charges and any changes in the terms for repayment of outstanding balances.
But the amendment was largely symbolic since it could not take effect without Senate action and would end with the immediate enactment of the new limits. (Editing by Leslie Adler)
