Credit cards may be the most competitive business in America. Anyone with decent credit — and a lot of people without it — finds his mailbox stuffed with come-ons touting “low introductory rates!” and “big rewards!”
That mailbox battle keeps prices down on the front end. But once you’ve signed up, many credit card banks find lots of ways to ding you with higher interest charges.
Federal bank regulators may put limits on those practices this summer, and it’s about time.
Among the tricks of the card trade is “double-cycle” billing, in which banks charge interest on debt you paid off a couple of weeks ago. They also can apply your payments to low-interest portions of your balance (such as money transferred from another credit card) while letting interest pile up on your high-interest debt.
Then there’s the old-standby of the credit card game: hiking the interest rate. Take a hit on your credit score or make a late payment, and up go your interest charges. The average “penalty” interest rate last year was 25 percent.
Not all banks practice such strategies, but enough do to prompt a low rumbling in Congress about the need for reform.

This month, the Federal Reserve and other bank regulators proposed rules to end  several abusive practices. The rules would take effect this summer unless regulators decide to change them after hearing public comments.
Gone would be double-cycle billing and the practice of allocating payments to low-interest debt. Fees would be limited on cards offered to people with bad credit.
But on the biggest issue — whether card companies should be allowed to continue hiking interest rates when credit scores fall — regulators split the difference. The Fed will allow higher rates on new debt, but not on existing balances. That gives customers an easy option if they don’t want to pay the higher rates:  They simply can stop using the credit card.
Banks still would be able to raise rates on existing balances if a customer is 30 days late on a payment for that bank’s card.
Credit scores can fall for lots of reasons. Default on a debt, and you’ll kill your credit score. But you’ll also lose points if you’re late on payments or take out another loan.
Some customers say that’s unfair. They argue that if they’re paying their credit card bill on time, the bank shouldn’t care what other debts they incur, or even what debts they’re not paying.

Bankers reply that they make money by matching interest rates to the risk presented by the borrower. Someone who owes a lot of money is more likely to get into trouble than someone who owes just a little. If the interest rate can’t reflect that danger, bankers say, they may have to hike rates on everybody to offset the bad risks of a few borrowers.
That’s not likely, because banks won’t want to alienate their good customers. They’re more likely to raise the credit scores required to get a card, meaning it’ll be harder for those with low credit scores to be approved.
Many consumers can’t handle the temptation of easy credit; they’d be better off if banks said “no” more often. But some hard-working people who are trying to rebuild their credit scores may need access to credit cards and won’t be able to obtain one.
Still the Fed’s willingness to tighten credit card rules is a good sign. The mortgage industry is in crisis in part because regulators sat back and watched as consumers buried themselves in debt they couldn’t repay. Regulators may have learned their lesson.