Fed OKs plan to rein in unfair, deceptive credit cards

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The banking industry opposes the changes, and says they could lead to higher interest rates. The rules could be finalized by the end of the year.

The proposed new rules would prohibit:

- Placing unfair time constraints on payments. A payment could not be deemed late unless the borrower is given a reasonable period of time, such as 21 days, to pay;

- Unfairly allocating payments among balances with different interest rates, with lenders crediting payments to balances with lower rates so they can continue to charge interest for balances at higher rates;

- Retroactively raising interest rates on pre-existing balances;

- Placing too-high fees for exceeding the credit limit solely because of a hold placed on the account;

- Unfairly computing balances in a computing tactic known as double-cycle billing;

- Unfairly adding security deposits and fees for issuing credit or making credit available;

- Making deceptive offers of credit.

The agencies said the proposed rules also would require federal credit unions to give consumers a chance to opt out of an overdraft protection program. And they would prohibit those institutions from charging a fee for an overdraft caused by a hold placed on consumer's funds when a person uses a debit card.

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