Friday afternoon United States regulators at the Federal Reserve Board announced that improved regulation and prohibition of certain “fraudulent” or “predatory” lending practices will aid in prevention of future credit crises and adequately protect the average consumer.

The Fed, combined with the National Credit Union Administration issued regulation which would eliminate double-cycle type “averaged interest” billing, put a minimum of 30 days post-due payment before an account can be considered in default (and subject to a higher interest rate).

Furthermore, credit companies who carry multiple balances at different interest rates for their customers will be forced to apply payments to the highest rate balance first, rather than any other metric (time-based, lowest interest rate, etc.) which may cause consumers to gain more snowball-type debt in interest.

Additional requirements created from this new Fed regulation on the creditors include including the time of day a payment is due, and any changes between statements and bills must be clearly outlined in a visible typeface (specifically, they should be bolded, or in a larger font size).

Various metrics report that U.S. citizens hold approximately $1 trillion dollars in revolving debt, with nearly 5% of that listed in default this quarter.

“These protections will allow consumers to access credit on terms that are fair and more easily understood,” says Chairman Bernanke.

The Federal Reserve Board also passed an adaption to the PSR policy for intraday loans for Federal Reserve banks. This new policy will, according to the Fed, “improve intraday liquidity management and payment flows for the banking system, while [mitigating] the credit exposure of Federal Reserve banks.”

“[The] Board approved changes to [elements] of the PSR policy dealing with daylight overdrafts, including adjusting net debit caps, streamlining maximum daylight overdraft capacity (max cap) procedures for certain foreign banking organizations, eliminating the current deductible for daylight overdraft fees, and increasing the penalty daylight overdraft fee for ineligible institutions to 150 basis points (annual rate).” said the Fed’s report.

The changes to the PSR policy are scheduled for late 2010, an absolute date will be announced before.

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