The Federal Reserve Board issued a proposal Wednesday that would protect consumers from paying large penalty fees and potentially lower the interest rates they pay on their personal credit cards.

The plan would prohibit a credit card company from charging consumers large penalty fees of more than the required minimum payment as well as require companies to explain to consumers why their rates increased. It would also require companies to evaluate rate increases since Jan. 1, 2009, and potentially reduce those rates, if appropriate as well as ban inactivity fees. The proposal, if finalized, would go into effect August 22.

It is the third part of the central bank's plan to implement a credit card accountability law passed in May 2009.

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