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Fed Regulators To Announce New Credit Card Curbs

Federal regulators will unveil regulations today that will crack down on the credit card industry, prohibiting practices such as arbitrarily raising interest rates on outstanding balances. It will also regulate overdraft protection, banning companies from assessing a fee unless the customer chooses not to opt out of that service.

The proposed regulations by the Federal Reserve could be finalized by year's end. "It's stronger than what has been issued in the past," says William Ruberry, a spokesman for the Office of Thrift Supervision, which is joining the Fed and the National Credit Union Administration in backing the proposals.

The banking industry denounces the rules and vows to fight them. "This is a very aggressive regulatory intervention," says Ken Clayton, svp of card policy at the Washington-based American Bankers Association. He says the regulations will lead to higher prices and fewer credit options for consumers.

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