The U.S. House of Representatives overwhelmingly voted on Thursday in favor of legislation to protect credit card users from hidden fees, sudden interest rate hikes and questionable billing practices.

The chamber voted 357 to 70 in support of the Credit Cardholders’ Bill of Rights, sponsored by New York Democrat Carolyn Maloney. This year, 107 Republicans voted in favor of the bill, compared with 84 Republicans voting for a similar bill last year.

"Today, the House sent a message to the American public that responsible regulation is part of the new era of financial responsibility," Maloney said.

Banks, which opposed legislation, have warned it could reduce the amount of credit available and make it more costly to use a credit card.

The American Bankers Association, which represents the big issuers, said it has "serious concerns" with the House bill.

Lawmakers "should strive to achieve the right balance between enhancing consumer protection and ensuring that credit remains available to consumers and small businesses at a reasonable cost," ABA President Edward Yingling said. "We continue to believe that more work needs to be done to achieve that balance."

President Barack Obama, who backs congressional efforts to overhaul the industry, issued a statement praising the bill for "paving the way toward real, meaningful credit card reform."

He said he would work with Congress to get a final measure requiring credit card companies to "set rules that are fair and transparent." He is expected to sign a bill into law by late May once the Senate considers its own version next week.

Democrats, who control Congress, added about a dozen amendments to the bill, including one that would require card issuers to maintain low introductory rates for at least six months, and to warn card holders if they are about to exceed their credit limits, allowing them to avoid a penalty fee.

It also includes a provision that would require federal banking agencies to submit information each year to Congress about their supervisory and enforcement activities related to credit card issuers’ compliance with consumer protection laws.

It also seeks to make disclosures easier to read and bans issuers from charging card holders who pay their bills by phone or online.

The bill allows issuers one year or until July 2010 to implement new rules after a final bill is enacted into law, or which ever comes first. Lawmakers and consumer groups who want changes sooner have criticized the timeline.

"The longer we wait to ban these practices the more our constituents will suffer," U.S. Representative Barbara Lee, a California Democrat, said during the House debate.

In 2007, Americans used an estimated 694.4 million credit cards with Visa Inc, MasterCard Inc, American Express Co and Discover Financial Services logos, according to industry data.

Citigroup Inc, Bank of America Corp, JPMorgan Chase & Co and Capital One Financial Corp had almost 77 percent of the credit card market at the end of 2007.

With the House vote concluded, focus turned to the Senate where that chamber’s credit card bill, co-sponsored by Democrats Christopher Dodd and Carl Levin, is expected to be considered next week.

Momentum is gaining for passage of a bill in the Senate where Democrats gained a big boost with the switch by Senator Arlen Specter of Pennsylvania from the Republican Party, adding to the Democratic numbers.

Several Republicans could end up supporting the bill.

"Now we hope that President Barack Obama’s support for reform will help Senator Dodd break the logjam preventing his even stronger bill from getting to the floor," said Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group.

The Federal Reserve and other banking regulators last year approved rules against what Fed Chairman Ben Bernanke called unfair and deceptive credit card practices but gave the industry until July 2010 to comply.

Lawmakers want to codify those rules into law and go even further, frustrated with surprising rate hikes and fees and charges from issuers — many of which have received billions of dollars in taxpayer bailout funds aimed at boosting lending.

Congress has seized on the public outrage against credit card companies, which was highlighted during a White House meeting last week between Obama and about a dozen credit card executives, who were urged to change their practices.

Senate Democrats recently complained to regulators that banks were raising rates on existing balances ahead of the Fed deadline.

House Financial Services Committee Chairman Barney Frank said that after the Senate acts the implementation date could be moved up if banks are still trying to squeeze money from consumers.

(Additional reporting by Thomas Ferraro, Richard Cowan, Kevin Drawbaugh, Jeremy Pelofsky and David Alexander)

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