by Jacob Goldstein

The Fed yesterday proposed a few new rules on credit card fees and interest rates.

The rules would limit fees for late payments and for exceeding a card's credit limit. Basically, the fee couldn't be higher than the value of the violation. For example, the fee for failing to make a minimum payment of $20 couldn't be more than $20.

Card issuers would also be banned from charging "inactivity fees" for customers who don't use their cards to make new purchases, and from charging multiple fees for a single violation.

And the rules would require issuers that have increased interest rates since the beginning of 2009 to "evaluate whether the reasons for the increase have changed and, if appropriate, to reduce the rate."

 

That "if appropriate" clause caught the attention of a Consumers Union lawyer, who said the interest-rate rule might have been tougher. "Who decides if it's appropriate?" the lawyer told the New York Times.

An official at the American Bankers Association told the Times: "The issues addressed by this proposal are complicated and, despite good intentions, may mean higher prices for credit card customers, and some may see their accounts closed."

The proposed rules are the latest result of the CARD Act, a law passed last year. Some provisions went into effect earlier this year, others will take effect in August. This Washington Post story explains some of the key changes.

Under the law, responsibility for implementing some new rules falls to the Fed. The rules proposed yesterday will be open for public comment for 30 days, and would take effect in August.