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Two Ways: Credit Card Fees Freeze?


Strengthen your portfolio in good times and bad.

President Barack Obama met with 13 executives from the US credit card industry today. He urged them to be more accountable and eliminate unfair interest rate hikes.

According to BBC News, politicians have expressed anger over the fact that many credit card providers with high fees are the very companies that received bailout funds. But executives at lenders like Citigroup (C), American Express (AXP), Visa (V) and MasterCard (MA) say capping rates would eat away at earnings in an already challenging environment.

During the meeting, held at the White House, Obama said he's confident both sides can come to a "common sensical" solution. He doesn't want to destroy the credit card market; he simply wants to "eliminate some of the abuses and problems that a lot of people are familiar with."

Just yesterday, new legislation out of the House of Representatives was given clearance by a key panel. Dubbed the Credit Cardholders' Bill of Rights, it's aimed at preventing issuers from imposing arbitrary interest rate increases and penalties.

From the Bull Pen: More market imbalances would result if the government were to cap interest rates. Banks, not being paid for risk, would simply cut existing credit lines, which could snowball into other issues. Nonetheless, Visa is possibly the best of the credit card plays. A pullback to $55-$56 could be an opportunity.

From the Bear Cave: American Express shares rallied after the company beat the number. Those bearish might see the stock near $22 or $24 as a downside opportunity. Remember to set your buy stop.

See you for Freaky Friday. Goodnight!
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No positions in stocks mentioned.

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