The good news is that the credit card industry is no longer a rootin’ tootin’ Wild West frontier town with no rules and Al Swearengen using excessively profane yet Shakespearean language.  The Treasury’s Office of Thrift Supervision (thrift supervision, where were these guys the past ten years, right?), along with the Fed and the NCUA approved a sweeping smackdown of the credit card industry, which of course will not take effect until July of 2010, so anyone holding a credit card can expect their rates to skyrocket, limits to plummet, and terms to morph unrecognizably sometime around June of 2010.

Oh wait, they’re already doing that.

Nonetheless, the proposed regulations, which Congress is expected to make official as soon as it finishes humming the death song of the auto industry and the last illusion of a manufacturing base in the US, are sure to be a welcome change for cardholders, who are currently confused beyond words at the inner-workings of an industry that influences and controls so much of their lives.  

One practice whose head is on the chopping-block?  Double-cycle billing, that reviled but not-frequently-used practice of using two billing cycles’ worth of average daily balances to calculate interest for the current billing cycle which allows card issuers to charge interest on already-paid principle.  The practice received mountains of bad press since last March’s Senate hearings on the card industry, and many issuers quietly (or otherwise) more or less abandoned it as a PR move, some (I’m looking at you, Citibank) tweaking their calculations ever-so-slightly so as to not technically be double-cycle, but not single-cycle either.

Another party that regulation is crashing is that time-honored tradition of not mailing out statements until a couple of days before the due date, making it impossible to pay on time, and then charging consumers late fees.  Under the new laws, statements would have to be sent out 21 days before the bill’s due date, which is going to make it that much harder to screw customers, although we at LOLFed are confident that they will find a way.

Do you like the universal default?  No, of course you don’t.  Universal default is the new smallpox.  It’s also about to be extinct like smallpox, so if you quit paying your Bally’s membership, your APR on your cards won’t go up.  This move will hopefully allow consumers to compartmentalize their fiscal irresponsibility, which is as it should be.  It will also lead to even more outrageous practices, but let’s not burst anyone’s bubble just yet by giving them this particular spat of bad news.

When you write that check every month, if your outstanding balance has more than one different rate applied to different parts of that balance (e.g., you racked up at Target with a 2% introductory rate, then when that rate expired you went buck wild at Nordstrom at the regular 12% rate), that payment currently goes toward paying down the balance with the higher rate, because that is not in your best interest.  No more!  In a year and a half, the highest-APR balance will be paid down first, so hurry to Target before your rate resets.

The credit card industry, of course, supports these regulations wholeheartedly because they realize that over the past fifteen years or so, they’ve really let things get out of hand and need guidance so they will know the right thing to do.  Ha ha, I am only making that up, credit card division executives are this very minute perched on ledges ready to leap because their lives are pretty much over now.  After these regulations are made effective, card issuers will only be able to afford to offer cards to qualified consumers, and the outlandish interest rates they will be forced to charge will ensure those consumers do not want to carry balances, and maybe having a gold card will come to mean something again someday.  The rest of America who will be unable to obtain cards is expected to move to Bartertown.

Card companies are anticipating a loss of around $12b per year in annual revenues due to the changes, which is enough to buy an entire container ship full of violins to play the world’s saddest song.