UPDATE 2-U.S. thrift regulator approves credit card reforms

(Adds public comment period, NCUA approval, Rep. Maloney comment, edits throughout)

By John Poirier

WASHINGTON, May 1 (Reuters) - The U.S. Office of Thrift Supervision on Thursday approved a plan to limit what it called "unfair or deceptive" billing practices by credit card companies.

The proposal would generally prohibit credit card companies from increasing the annual percentage rate on a customer's outstanding balance, the OTS said in a statement.

It would also ban companies from reaching back to the prior billing cycle when calculating the amount of interest charges, a practice known as double-cycle billing.

"Today's proposal addresses practices that have raised concern about fairness and transparency," the OTS said, adding that it would bar thrifts it regulates from "engaging in unfair or deceptive acts or practices" with credit cards.

While the OTS rules affect only savings and loans, the proposal is also supported by the other federal agencies that regulate credit cards issued by both banks and credit unions -- the Federal Reserve and the National Credit Union Administration.

The NCUA, which regulates federal credit unions, also approved the proposals on Thursday, and the Federal Reserve Board is expected to approve the proposal on Friday.

The three agencies aim to finalize the rule by the end of 2008, subject to comment from the public and industry and consumer groups, the OTS said.