WASHINGTON – The Federal Reserve and two other banking regulators unveiled Friday an aggressive effort to address some of the “unfair or deceptive” credit-card company practices, the Washington Post reports.

The proposed regulations would prohibit such practices as arbitrarily hiking interest rates on outstanding balances and applying a payment first to the balance with the lowest rate on cards that have different interest rates for different balances. The regulations could become finalized by the end of this year.

“It’s stronger than what has been issued in the past,” said William Ruberry, a spokesman for the Office of Thrift Supervision (OTS), which, along with the Fed and the National Credit Union Administration (NCUA), is supporting the proposals. “What they proposed is a significant set of rules governing credit card practices and overdraft protection.”

In the past, the agencies simply forced card issuers to have better disclosure of terms and conditions to consumers. Last summer, the Fed started to develop a plan to require card companies to improve their disclosures, which is still on the table. However, these new regulations would be more pro-consumer than past proposals.

“Disclosure has been the tool of choice for regulators. Now they are saying that unfair practices are out of control and they need to ban those practices,” said Edmund Mierzwinski, consumer program director for U.S. PIRG, a consumer advocacy group. “This is surprising coming from banking regulators."

Both the OTS and NCUA have approved the proposal, and the Fed voted on it during its meeting on Friday. Once approved by all three agencies, the rules would be published in the Federal Register, and the public will have 75 days to submit comments.

The banking industry has vowed to fight the proposed regulations.

In other credit-card news, MasterCard has updated its merchant rules for accepting its cards. Visit the MasterCard Web site to download the updated merchant and chargeback rules.