Bankers: Credit rules are 'improvement'

WASHINGTON, Dec. 18 (UPI) -- New rules for U.S. credit card companies are "a dramatic improvement" on existing rules, the American Bankers Association said Thursday.

The guidelines -- developed by the U.S. Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration -- were announced Thursday.

The new rules prohibit banks from raising interest rates until late payments are at least 30 days overdue and bar banks from slapping on late fees too quickly. Lenders are also barred from applying payments to balances with higher rates of interest before others, The Washington Post said.

Edward L.Yingling, president and chief executive officer of the American Bankers Association, said in a news release the regulations "signal the beginning of a new market structure for credit cards."

"In seeking to address concerns expressed by policymakers and consumers, the Fed has severely restricted or prohibited card issuers from engaging in certain practices such as 'universal default,' 'double-cycle billing,' and raising interest rates on existing balances," Yingling said.

"The disclosure requirements, which are the result of several years of consumer testing undertaken by the Fed, are a dramatic improvement over the existing legalistic disclosures."

Yingling said new disclosure rules will ensure that key parts of cardholder agreements will be presented in "easy to understand language."