(Reuters) - The Office of Thrift Supervision (OTS), a federal banking regulator, on Thursday completed new rules to rein in fees and billing practices by credit card issuers.
The rules are expected to be approved later on Thursday by the Federal Reserve Board and the National Credit Union Administration for their respective institutions.
Following are key provisions of the rules, which were proposed in May:
* Reasonable time to make payments
Institutions cannot consider a payment late unless consumers were given a reasonable amount of time to pay. Banks, thrifts and credit unions must ensure that credit card statements are mailed or delivered at least 21 days before the payment due date.
* Double cycle billing
Banks cannot use the practice known as double-cycle billing, in which they reach back into prior billing cycles to compute finance charges. For example, under double-cycle billing, a cardholder who begins a billing cycle with a $500 balance and makes a one-time payment of $450 during the cycle would be charged interest on the full $500. Under the new rules, the cardholder would be charged interest on the remaining balance of $50, in this example.
* Interest rate increases on outstanding balances
Banks cannot raise the annual percentage rate on an outstanding balance, except in certain conditions. For example, an institution could raise the variable rate if a promotional rate has expired or if the cardholder’s payment is delinquent.
* Payment allocation
When different annual percentage rates apply to different balances, banks cannot allocate amounts paid above the minimum payment in a way that hurts consumers. Instead, they must apply the consumer’s payment over the required minimum first to the balance with the highest annual percentage rate, or split the amount equally among the balances.
* Fees/Deposits for credit issuance
Banks cannot charge account-opening fees or membership fees to a credit card if they would use up most of the available credit on the account during the first year after account opening.
* Universal default
Banks cannot increase the interest rate on outstanding balances if the consumer defaults on other debt obligations such as a gym membership. The practice is sometimes referred to as universal default.
Washington equities desk; Editing by Derek Caney
Our Standards: The Thomson Reuters Trust Principles.