WASHINGTON (3/4/10)--The Federal Reserve (Fed) has proposed amending Regulation Z “to protect credit card users from unreasonable late payment and other penalty fees and to require credit card issuers to reconsider increases in interest rates.” The proposed rule is the third portion of the Fed's phased implementation of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009. These portions of the CARD Act will become effective on Aug. 22. In a release announcing the potential changes, Fed Governor Elizabeth Duke said that the proposal "addresses two key costs of using a credit card--fees and interest rates." The rule, if approved, “would prevent credit card issuers from charging large penalty fees for small missteps by consumers and would require issuers to reevaluate rate increases imposed since the beginning of last year," she added. Specifically, the proposal would prevent card issuers from charging late payment and over limit fees in excess of the amount of the purchase which triggered the fee. Inactivity fees and, in some cases, multiple penalty fees would also be prevented under the proposal. Credit issuers would also be required to “inform consumers of the reasons for increases in rates” and “evaluate” any rate increases made since Jan. 2009. These rates could then potentially be reduced. The proposal will remain open for comment for thirty days after it is published in the Federal Register.