In early May, the Federal Reserve proposed regulations which could be final before the end of this year. In the House of Representatives, \"The Credit Cardholders’ Bill of Rights,\" sponsored by 110 members of that body is being pushed by its author, Rep. Carolyn Maloney (D-N.Y,).

For many seniors, it’s hard to believe that in bygone days it was practically a sin to go into debt. Today, credit card debt is a fact of life, among seniors as well as younger spenders. Many consumers between the ages of 65 and 69 are up to their ears in credit card debt – $6,000 on average, according to the National Consumer Law Center.

The Credit Cardholders’ Bill of Rights is aimed at reforming major industry \"abuses\" and improving consumer protections. The bill:

* Protects cardholders against arbitrary interest rate increases on a borrower’s existing unpaid balance.

* Protects cardholders from \"due date gimmicks\" such as charging late fees when cardholders aren’t given enough time to make a payment.

* Shields cardholders from misleading terms in the contract between cardholder and issuer.

* Protects cardholders from double-cycle billing — the practice of reaching back to earlier billing cycles when figuring interest rate charges for the current cycle.

* Empowers cardholders to set limits on their credit. In other words, banks that offer credit limits would have to disclose what factors determine whether a consumer will qualify for the lowest rate and highest credit limit. Some low-income cardholders set a limit and ask that the issuer inform them so they won’t spend above that limit one it has been reached.

* Protects consumers from \"fee-heavy subprime cards.\" In other words, limit the charges that automatically reduce available credit for cards issued to people who really can’t afford them.

Requires Congress to provide better oversight of the credit card industry.

The new proposed Fed regulations include some of the Maloney bill’s provisions. The Fed proposals would:

* Block banks from using earlier billing cycles when figuring the amount of interest-rate charges in the current cycle — \"double-cycle billing.\"

* Keep a card issuer from increasing the annual interest rate on a borrower’s existing unpaid balance.

* Prohibit banks from applying payments over the minimum in a way that maximizes interest charges.

* Make banks give consumers the full benefit of discounted promotional rates on credit cards by applying payments in excess of the minimum to any higher-rate balances first, and providing a grace period for purchases where the consumer is otherwise eligible.

* Require banks to give consumers a \"reasonable\" time to make payments.

* Make banks limit the fees that reduce the available credit, thus addressing subprime credit cards.

Fed Chairman Ben Bernanke said: \"The proposed rules are intended to establish a new baseline for fairness in how credit card plans operate. Consumers relying on credit cards should be able to predict how their decisions and actions will affect their costs.\"

On the Senate side of Congress Christopher Dodd (D-Conn.) chairman of the Committee on Banking, Housing, and Urban Affairs, has introduced legislation not unlike the Maloney measure, to rid the credit card industry of \"suspect\" practices.

This being an election year, lawmakers want to please constituents, especially since they have been accused of being too soft on the banking industry where subprime mortgages were concerned. Many homeowners got into a financial fix struggling to pay increased mortgage charges.

Rep. Maloney, commenting on the Fed’s proposed rules changes put out a statement saying:

\"The Fed has clearly seen the momentum building for my legislative reforms. I’m pleased the Fed seems to have taken a page from my bill...and proposed curtailing abusive practices like retroactive repricing...and giving subprime credit cards to people who can’t afford them.

\"I believe it is a much needed correction to a market that has gotten wildly out of balance. A credit card agreement is a contract between a card company and a cardholder. But what good is a contract when only one party has any power to make decisions.\"

Americans have run up an estimated $850 billion in credit card balances. But, despite the hubbub over debt, the majority of U.S. households have no credit card debt, according to the Federal Reserve’s latest Survey of Consumer Finances. Although 14 percent of Americans hold more than 10 credit cards, about 25 percent of us own no credit cards. Another 30 percent pay off their balances every month.

Banking executives have complained that the Maloney bill is so restrictive it would bring higher costs to all borrowers because companies would no longer be able to properly judge an individual’s potential risk.

Edward Yingling, president of the American Bankers Association, said about the Fed proposal and Congressional measures: \"Regulatory responses such as these are effectively price controls, which have never worked in the past, and we do not believe they will work here.\"

High costs of all kinds are forcing some seniors to resort to credit cards and the possible ensuing debt. For some seniors, the burden of credit card debt stems from having inadequate savings when they retire and being on a fixed income.

Officials from Citi Cards, American Express and Discover Financial Services have acknowledged that some reform was needed. Last year, Citi Cards, for example, quit raising customers’ interest rates because of delinquent actions with other creditors, a practice called \"universal default.\" It also stopped so-called \"any time, any reason\" repricing.

Senior credit card debt has not reached the peaks of what’s owed by younger spenders. But the potential danger for seniors is greater because they may have only a few more years when they can work or already be in retirement.

A national survey last year by CreditCards.com about the nation’s bill-paying priories looked into which bills they would pay first, and which they would pay last — utility bills, their mortgage payment, an auto loan, or a credit card bill — if they faced financial trouble.

Some 54 percent said their mortgage would come first. Utility bills ranked second in their priorities. Only 6 percent said they would pay their credit card bill first if they were falling behind. And 64 percent said they would postpone paying their credit cards. A small minority clung to their credit cards even if it meant letting their monthly mortgage payment slip. Part of the reason may stem from the number of people whose adjustable-rate mortgage has gone up while the value of their home plunged in the turbulent housing market.

The first plastic card was issued by American Express in 1959. Within the first five years, some 85,000 establishments accepted credit cards. And a million cards were being slipped out of people’s wallets and plunked down to pay for a variety of transactions.

In 1959, the revolving balance was introduced. This meant that cardholders had the risky option of not having to pay off the full amount of their credit card bill at the end of each cycle. It gave cardholders greater flexibility and card companies the opportunity for big profits through high finance charges.

While plastic cards probably won’t disappear, newfangled gadgets are appearing, such as chips that can be implanted into cell phones and used to pay for whatever the heart desires. --SENIOR WIRE