Credit card rules back consumers

WASHINGTON, Dec. 18 (UPI) -- New rules for U.S. credit card companies are a step forward for consumers, who have lobbied hard for oversight, industry analysts say.

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

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 Post said.

"When companies sharply increase interest rates, that could have a devastating effect on the financial stability of credit card holders," Travis Plunkett of the Consumer Federation of America told the Post.

The strategy has changed from educating consumers to dictating rules for the industry.

"Eighteen months ago the Fed was focused on disclosure and transparency, and now they're coming out with a prescriptive, rules-based guidance. It's a whole different world," said Brian Gardner at investment bank Keefe, Bruyette & Woods.