RPT-UPDATE 2-U.S. House passes credit-card reform bill

The U.S. House of Representatives on Tuesday passed legislation that would limit surprise interest-rate increases and fees for credit-card users, but the bill faces an uncertain fate in the Senate.

The House passed the bill, 312 to 112, but it was not expected to advance in the Senate as Congress tackles the Bush administration's $700 billion Wall Street bailout plan before adjourning as soon as Friday.

Credit-card issuers like Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz) and Citigroup (C.N: Quote, Profile, Research, Stock Buzz) could still face restrictions from the Federal Reserve, which is expected to finalize similar rules by the end of this year.

The bill would prevent banks from retroactively increasing interest rates on an existing credit-card balance unless the cardholder is more than 30 days late. Banks would have to give a 45-day notice of any interest-rate increase.

It also would give cardholders more time to pay by requiring banks to mail bills 25 days before the due date, rather than 14 days.

"For too long card issuers have been allowed to do whatever they want for any reason," said New York Rep. Carolyn Maloney, the bill's sponsor. "No other industry is allowed to raise the price of a product after a consumer has bought it."

Banks oppose the bill, which could limit their credit-card revenue at a time when they are already reeling from a credit crisis brought on by the collapse of the U.S. housing market.

House Republicans called the bill a distraction from the bailout effort that could lead to higher interest rates and restricted credit for consumers.

Unfair and deceptive practices are better addressed by the Fed, they said.

"This is not the way to do this, nor is it the time to do this," said California Rep. John Campbell.

Democrats worry that banks could water down the Fed's proposals.

The White House has said it opposes the bill.

Among the biggest credit-card issuers are JPMorgan Chase (JPM.N: Quote, Profile, Research, Stock Buzz), Capital One Financial Corp (COF.N: Quote, Profile, Research, Stock Buzz) and Discover Financial Services (DFS.N: Quote, Profile, Research, Stock Buzz). (Reporting by Andy Sullivan; Editing by Brian Moss)