Regulators Propose Credit Card Rule Changes

Credit cardholders would get some breaks on the fees and interest rates charged on their accounts by issuers under rule changes proposed by major banking regulators yesterday.

The Office of Thrift Supervision (OTS) and the National Credit Union Administration (NCUA) released seven proposed rule changes on such topics as late payments, interest increases on outstanding balances, account limit fees, payment allocation, double cycle billing, and clarity on the interest rate offers.

The Federal Reserve is scheduled to discuss the proposal this afternoon and sign off on it. The Fed sets policy for most banks, while the OTS oversees savings & loan institutions and the NCUA regulates credit unions.

The proposal comes as Congress has stepped up its plans to impose rules on the industry. Rep. Carolyn Maloney, a New York Democrat, has held hearings on a bill that would regulate certain issuer practices. On Wednesday, Sen. Christopher Dodd, chairman of the Senate Banking Committee, announced a measure that included some of the seven proposals in the regulators’ release.

The proposed rules also address overdraft programs, with specific procedures for offering the cardholder certain opt out privileges, and a ban on charging overdraft fees when the issuer has placed a hold on funds.

The proposal is open for public comment for 75 days.