Credit card reforms

Consumer groups last week hailed the news that federal regulators have adopted new rules governing credit card companies and interest charges.

The changes go into effect next July and -- among other things -- will prevent credit card companies from raising interest rates on current balances. Any interest rate hikes would apply only to future purchases or cash advances.

The new regulations also overhaul how companies may compute whether a payment was received late; stop companies from allocating payments to balances with lower interest rates when a borrower has balances with different rates; and limit certain fees and charges.

"Every day the taxpayer is being asked to foot the bill for our biggest banks' irresponsible lending practices," said Sen. Carl Levin, D-Mich. "America's banking giants can't be allowed to dig themselves out of the hole they are in by loading up American families with unfair fees and charges."

No doubt such populist sentiments will resonate with millions of Americans, many of whom struggle underneath a crushing load of debt. U.S. consumers owe about $860 billion to credit card companies -- four times what they did in 1990.

But let's remember that these well-intentioned changes will cost banks an estimated $10 billion a year, meaning some consumers will face higher borrowing costs thanks to the regulations. In addition, expect it to become more difficult for some borrowers -- particularly those with lower incomes or a limited credit history -- to gain access to certain types of credit.

These may be perfectly acceptable outcomes, but expect others not yet contemplated. Because if there's any principle that governs Congress and the federal bureaucracy when it comes to complicated legislation or other meddling, it's the Law of Unintended Consequences.