US Regulators Take Action Against Unfair Credit Card Practices

The Office of Thrift Supervision is the first of the three US financial regulatory bodies to adopt new rules prohibiting certain unfair credit card practices. The Federal Reserve Board and the National Credit Union Administration are expected to approve the same changes.

"The rule bans practices often cited as unfair to consumers, such as raising the interest rate on an existing credit card balance when the consumer is paying the credit card bill on time. ... The rule requires that consumers receive a reasonable amount of time to make their credit card payments, prohibits payment allocation methods that unfairly maximize interest charges and, in the subprime credit card market, limits fees that reduce the credit available to consumers."

The rule takes effect July 1, 2010, - although the OTS says it "encourages institutions under its supervision to make their best efforts to conform as soon as practical, particularly to the provisions related to high-fee cards."

A summary of the rule and the full text of the rule are available online.