Yet another article (BusinessWeek) on how credit card users are angry at unfair and misleading tactics used by credit card corporations (also see "Consumers Blast Credit Card Companies"). Companies raising interest rates on a whim and rising penalty rates are just a couple of the things that are leading to a consumer backlash. The climate is so bad (with the general state of America's economy only serving to make things worse) that the Federal Reserve Board (FRB) is looking into regulating the credit card industry and banning certain practices for the first time in over twenty years.

"David Giantomasi says he vigilantly paid his credit-card bills each month. Even if he could only make the minimum payment, he made sure to get all his monthly payments squared away. So he was shocked when the interest rate on his Chase credit card suddenly jumped to 19.99% from 7.99%. When Giantomasi called the card issuer to demand an explanation, he was enraged. He was told that overall turmoil in the credit markets meant higher rates for a number of customers."

What's a credit card company to do? With credit defaults and late-payments at an all-time high, they are forced into these shady practices in order to make sure that they aren't the next victim in the drama that is America's current economic situation. What can you do about it? Well, as you can see from the above excerpt, not much. That's why the feds are finally thinking about jumping in.

Look forward to these exciting new changes:

• No more sudden interest-rate hikes on existing debts just because the credit card company feels like it.
• Payment will not only go towards the lowest APR balance on your card but will be split up between all of your different balances, no matter what the APR differences are. (Hurray for low-rate/0% APR balance-transferers!).
• Longer grace periods before fees kick in.

Unsurprisingly, credit card companies are not amused and are foretelling doom and gloom for us all.

"The five largest credit-card issuing banks say that as much as consumer may enjoy lashing out, they're likely to regret the end result of the rule changes. The new regulations will curtail their ability to "price for risk," the banks say: By being able to change the rates they charge cardholders based on payment history, outstanding debt, and credit score, banks can price in the risk that each individual consumer won't be able to pay off his debt. The alternative is to cut back on low-interest offers for all cardholders, the banks say."

The proposal is supposed to be hammered out and (maybe) enacted by the end of the year.

Read the entire article over at BusinessWeek and see the list of proposed changes by the FRB here.