US to enforce new restrictions on credit cards

American Credit card companies are to see restrictions on the amount they can charge in fees, as well as how much they can raise interest rates on existing balances.

Barack Obama is signing a new law today, known as a credit card holders "Bill of Rights", which is to take effect fully by February 2010.

It has been predicted that the new changes will be very expensive to implement for credit card providers.

The new caps have been designed to prevent some people from taking too much credit.

Senator Christopher Dodd, chairman of the Senate banking committee said: "This cements a victory for every American consumer who has ever suffered at the hands of the credit card industry”.

Almost $1 trillion is currently owed by American credit card users.

The new changes were sparked off by growing concerns in the wake of the credit crunch. This is the first of many law changes planned for the future, as the US government moves toward tightening its regulation of the banking system.

Sandra Quinn of the UK card association Apacs said: "We will watch to see how the situation in the US develops. Many of the new US policies already exist in the UK under the Banking Code and have done for four years".

The Consumer Affairs Minister, Gareth Thomas said: "We continue to talk regularly to consumer groups and the credit card industry and these discussions, along with proposals to provide further help to people in difficulty with their finances, will be reflected in the forthcoming Consumer White Paper”.

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