Feds Overhaul Credit Card Rules

New rules will tighten interest rates, could cost issuers $10B in revenue
By Ambreen Ali,  Newser User
Posted Dec 18, 2008 11:53 AM CST
New rules will prevent companies from raising interest rates on existing balances.   (AP Photo)
camera-icon View 2 more images

(Newser) – Credit card companies will be forbidden from raising interest rates on existing debt after major changes to federal regulations OK'd today go into effect, USA Today reports. Starting in July 2010, the new rules will also restrict issuers' ability to cherry-pick higher-interest parts of balances to pay down first, and mandate a 45-day notice of account changes.

Banks, which say they stand to lose $10 billion annually under the new rules, warn that tighter, costlier credit will result.The Treasury finalized the rules this morning after reviewing a record 65,000 public comments; the Fed is expected to sign off today. The announcement comes as loan delinquencies swell.