Bill expected to be signed for credit card reform

WASHINGTON (AP) - Giving credit where it's due -- that's the idea behind credit card reform legislation being hashed out in the Senate.

Under a compromise proposal, consumers who are paying more in interest because they have fallen behind on their credit-card bills could regain their older, lower rates if they pay their bills on time for six months.

The Senate proposal was brokered between Republicans, who say lenders should be able to take into account a person's behavior, and Democrats, who contend that the practice of hiking rates on past balances prevent consumers from climbing out of debt.

The agreement was included as part of a broader package on credit card reform announced today by Senate Banking Committee Chairman Chris Dodd. The bill is expected to pass this week with President Barack Obama's support.

More on the Web

The bill would go into effect nine months after enactment. Read more from CBS News: Senate Deal Could Lower Credit Card Rates.

According to CBS, here are some other provisions the law would include:

  • Require anyone under 21 to prove that he or she can repay the money before being given a card, or have a parent or guardian promise to pay off the debt if he or she defaults.
  • Require lenders to give customers 45 days notice before increasing rates and mail their bills 21 days before the balance is due.
  • Ban fees if customers want to pay their bills by phone or online.
  • Prohibit over-the-limit fees unless a cardholder elects to be allowed to go over their limit.
  • Require lenders to say how much time it would take and how much money in interest would be paid if only the minimum monthly payments are made.
  • Require that gift cards remain valid for five years.