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The Fed has voted to approve proposed laws that would prohibit unfair and misleading practices by the credit card industry. Consumer advocates praise the move, while lobbyists and industry insiders refer to it as an unprecedented intrusion into the way they do business. Federal Reserve Chairman Ben Bernanke hopes that these rules will usher in a new era of fair and honest business practices, while others believe that any economic relief provided by the changes will be too little, too late.

So what precisely has been proposed? Most of the changes sound like common sense: Give credit card holders suitable moment to pay their bills, don’t add unfair or unreasonable charges, and stop double-cycle billing. Card companies will

additionally be compelled to stop applying raising the interest rate on existing balances, and stop applying payments to lower-interest balances first in order to keep collecting high interest from other balances. Overdraft protection has additionally come under scrutiny. Federal credit unions will be mandatory to offer members a chance to opt out of pricey overdraft protection programs.

What will these changes mean, and when will they take effect? Critics distress that consumers with less-than-stellar credit will find it difficult to obtain a credit card under the new rules. They foresee higher interest rates and fewer offers of credit. The new rules could take effect as soon as the end of 2008.

Orginal post by janna