Fed Set To Overhaul Credit Card Standards

December 15, 2008

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December 15, 2008

The Federal Reserve meets later this week to finalize rules that would affect the credit card industry. The regulations are likely to include banning card companies from changing interest rates on existing balances, except in certain cases. The aim is to protect consumers, but industry representatives say the changes will cost them billions. Consumer advocates say the reforms don't go far enough.

RENEE MONTAGNE, host:

NPR's business news starts with new rules for credit card companies.

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MONTAGNE: After years of being hands-off, the federal government is set to overhaul standards for the credit card industry. Later this week, the Federal Reserve will meet to finalize rules that would affect thousands of lenders, including credit card titans JPMorgan Chase and Bank of America. The aim is to protect consumers.

The regulations are likely to include banning card companies from changing interest rates on existing balances, except in certain cases. Lenders may also be banned from changing the terms of a credit card if the borrower is late in paying other bills, like utility bills. These rules wouldn't take effect until mid-2010. The industry says the changes will cost them billions. Consumer advocates say the reforms don't go far enough.

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