Perhaps most importantly, the Fed will forbid lenders from raising the interest on past balances, a practice that has drawn sharp criticism from borrowers and consumer advocates who claim this practice makes it impossible to compare the long term cost of consumer credit. 

Woodstock Institute, a longtime critic of unilateral changes to credit card agreements, first illustrated the practice in 2005 with an analysis of the terms and conditions of credit cards offered by major banks, and those cards issued by credit unions.  The report found that credit unions were much clearer about the total cost of borrowing. While these rules take important steps toward eliminating many of the credit card industry’s worst practices, they are no substitute for Congressional action to protect consumers.

“A rule is a rule, and can be rolled back down the road,” says Tom Feltner, policy and communication director at Woodstock Institute. “We applaud the Fed’s strong position in favor of the consumer, but look to Congress to enshrine these protections into law.”

The Credit Cardholder’s Bill of Rights, introduced by Rep. Carolyn Maloney (D-N.Y.) in 2008, included many of the provisions included in today’s Fed rule.  It passed the House Financial Services Committee with the support of Illinois Reps. Luis Gutierrez and Melissa Bean and is expected to be a top priority in the coming session.