A Federal Reserve Board proposal released Tuesday would clamp down on practices in the credit card industry by reining in fees, limiting card use by young borrowers and restricting rate increases.
The changes were mandated by the Credit Card Accountability, Responsibility and Disclosure Act signed into law in May.
The changes would generally bar rate increases during the first year a credit card account is open. Lenders would not be allowed to issue cards to borrowers younger than 21 unless the youth could make payments or get permission from a parent or cosigner.
Credit card companies would also need their customer's permission before charging fees for transactions that top credit limits, and "two-cycle" billing methods would be banned.
"This proposal is another step forward in the Federal Reserve's efforts to ensure that consumers who rely on credit cards are treated fairly," Fed Gov. Elizabeth Duke said in a press release. "The rule bans several harmful practices and requires greater transparency in the disclosure of the terms and conditions of credit card accounts."
Once the proposal is published in the Federal Register, the public will have 30 days to comment.