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The Federal Reserve is widely expected to adopt long-anticipated new rules for credit card issuers on Thursday, and representatives of the American Bankers Association expect no surprises. "These rules are an unprecedented reform of the credit card market, and they will fundamentally change the relationship that cardholders have with their banks," Peter Garuccio, an association spokesperson, tells CardLine. The Fed, Office of Thrift Supervision and National Credit Union Administration jointly proposed the rules changes in May (CardLine, 5/2). If passed, the new rules would prohibit issuers from raising interest rates on existing balances, except in limited situations, such as when cardholders make payments at least 30 days late. The rules also would change the payment cycle from a minimum of 14 days to 21 days and would require issuers to apply cardholders' payments first to their highest-interest balances. During the proposed rules' comment period, which ended in September (CardLine, 9/10), the Fed received some 62,000 comments, more than for any previous proposed rule change. Garuccio could not speculate exactly how the rules, if implemented, would affect credit card issuance. "The Fed itself has indicated in its proposal that these new rules are likely to result in increased interest rates and decreased credit for some individuals," he says.
