The proposed rules, which have received overwhelming consumer support, prohibit banks from practices like raising the interest rates on pre-existing credit card balances unless a payment is over 30 days late, and applying payments in a way that maximizes interest penalties.
The Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration, are all expected to approve the regulation. The rules are expected to take effect by 2010.
"It will fundamentally change the relationship between cardholders and banks," said Peter Garuccio, a spokesman from the American Bankers Association.
If approved, the Fed's rules will mean an end to double-cycle billing, which averages out the balance from two previous bills. That means that consumers who carry a balance can get hit with retroactive interest on their previous month's bill - even if they've already paid that off.
Consumers would also be given a reasonable amount of time to make payments, and payments would be applied to higher-rate balances first to reduce interest penalties and fees.
Credit card statements would clearly list the time of day that a payment is due, and any changes to accounts would be in bold or listed separately.
And, finally, no more universal defaults, a policy which allows credit card issuers to increase the interest rate on one card if a customer misses a payment on another card.
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