On Thursday, the Federal Reserve Board approved the final set of rules that will help protect consumers from unfair credit card pratices and improve disclosure associated with revolving credit accounts. The new rules are set to take effect July 1, 2010. The new credit card rules are primarily aimed at preventing arbitrary rate increases and providing consumers with adequate time to pay bills.

“The revised rules represent the most comprehensive and sweeping reforms ever adopted by the Board for credit card accounts,” said Federal Reserve Chairman Ben S. Bernanke.  “These protections will allow consumers to access credit on terms that are fair and more easily understood.”

In addition to arbitrary rate increases and providing adequate time to make payments, the new rules will also:

• Forbid banks from imposing interest charges using the “two-cycle” billing method.
• Prohibit the use of payment allocation methods that unfairly maximize interest charges.
• Address subprime credit cards by limiting the fees that reduce the amount of available credit.

The Board received over 60,000 comments from consumers and considered information gathered from consumer testing to finalize the rules on unfair credit card practices.

The Board will also be implentmenting revised rules to Regulation Z (Truth In Lending Act) for credit card and other types of revolving credit accounts. The new changes are designed to make sure that information is provided in a timely manner and in an easily understandable form. The final rules will require changes be made to the timing, format and content requirements in which consumers receive credit card applications, solicitations and disclosures.

“Our intent is to increase transparency and fairness in how credit card and deposit accounts operate, thereby enhancing competition and empowering consumers to better manage their accounts and avoid unnecessary costs,” said Federal Reserve Governor Randall S. Kroszner.  “The rules represent a significant step forward in consumer protection.  By ensuring fairness and making credit terms easier to understand, these safeguards should allow more consumers to benefit from using credit.”

For full details and to read the Federal Reserve’s full press release, click here.