U.S. senator offers credit card reforms

By John Poirier

WASHINGTON, April 30 (Reuters) - Credit card companies would be banned from unilaterally changing the terms of interest rates and fees due to unrelated activities by a consumer under legislation unveiled by Senate Democrats on Wednesday.

The industry quickly went on the offensive and again warned that legislation would result in "unintended consequences" such as higher costs for credit card holders, including those who manage their credit well.

The bill, which is mainly sponsored by Senate Banking Committee Chairman Christopher Dodd, comes before the Federal Reserve holds an open meeting Friday morning on how to curb unfair and deceptive practices in U.S. lending practices.

With Congress largely focused on acting to help troubled homeowners facing foreclosure, the probability of any credit card reform reaching the White House this election year remains uncertain.

"Confusing, misleading and in some cases predatory practices have become standard operating procedure for some in the credit card industry," Dodd of Connecticut said.

The bill, called the Credit Card Accountability, Responsibility and Disclosure Act, would strengthen industry regulation and oversight, and ban unfair and deceptive practices such as universal default and double-cycle billing, Dodd said.

It has the support of House Financial Services Committee Chairman Barney Frank and Carolyn Maloney of New York, who earlier this year introduced a House bill dubbed the Credit Cardholders Bill of Rights.

The chairman of the Senate Permanent Subcommittee on Investigations, Carl Levin of Michigan, along with other Democrats, have been highly critical of double billing, which is when a consumer is charged higher payments on a balance already paid.