WASHINGTON -- The federal government yesterday approved new rules that would ban certain financial institutions from engaging in unfair credit card practices.

The steps taken by the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration represent the most significant overhaul of the credit card industry in decades.

The government yesterday banned banks, credit unions and savings associations from a number of practices, including:

• Raising interest rates on existing balances unless a payment was received more than 30 days late;

• Charging a late fee if a borrower was given fewer than than 21 days to pay;

• Applying payments in a way that would result in debts with higher interest rates getting repaid last.

In the subprime credit card market, which caters to borrowers with poor or mediocre credit histories, fees that reduce the credit available to them would be restricted. Financial institutions would have to comply with the new regulations by July 1, 2010.

With yesterday's approval of new rules banning "unfair and deceptive" practices, the federal government is handing a victory to consumer groups who have long complained of lax oversight of the $970 billion industry. Even with all its lobbying power, the credit card industry was not able to beat back the most sweeping overhaul in decades. Financial companies and trade groups argue that regulators are overreacting to problems in ways that will limit the availability of credit.

Yesterday's move is the first of what could be many attempts to further regulate the industry, as several members of Congress plan to codify the Fed's regulations next year and perhaps pass even more stringent rules. It also represents a significant shift in the thinking of the regulatory agencies, which still are run by Republican appointees.

Analysts note that regulators have stepped back from an emphasis on educating customers about what they should do, primarily through disclosures, in favor of telling companies and customers what they can and cannot do.

"It just shows how the world has changed," said Brian Gardner, who follows financial regulation issues for the investment bank Keefe, Bruyette & Woods. "Eighteen months ago, the Fed was focused on disclosure and transparency, and now they're coming out with a prescriptive, rules-based guidance. It's a whole different world."

Consumer advocates argue that the changes are necessary because borrowers are having a hard time keeping up with payments. The latest Fitch Retail Credit Card Index, released this month, shows that 60-day delinquencies have increased by nearly 24 percent since August, to 4.8 percent.

"If the rule is adopted largely as it was proposed, it could help improve the economic stability of many families," said Travis Plunkett, legislative affairs director of the Consumer Federation of America. "When companies sharply increase interest rates, that could have a devastating effect on the financial stability of credit card holders."

But by limiting banks' ability to manage risk, regulators would be forcing the institutions to withhold credit, raise interest rates or eliminate such programs as zero percent balance transfers to compensate for it, industry officials and analysts said. That could prolong the credit crunch, dampen consumer spending and stall an economic recovery, they said.

"Every proposal needs to be looked at in terms of its effect on credit availability," said Ed Yingling, president of the American Bankers Association. "They need to be concerned that on the one hand, they're encouraging banks to lend more, and on the other hand, you have a series of policies that tell banks to lend less."

In written comments submitted to the three agencies in August, Gregory Baer, deputy general counsel of Bank of America, said that according to industry data, credit lines would drop by an average of about 21 percent, taking $931 billion of credit out of the market.

J.P. Morgan Chase officials declined to comment yesterday, but said in their written comments that industry losses could result in a nearly 12 percent increase in annual percentage rates, to an average of 16.58 percent.

Several consumer advocates and members of Congress said the card companies were trying to scare regulators into watering down the rules. They also pointed out that in recent months, banks have been amending terms on existing accounts while scaling back on credit card offers.

"Who are they kidding? They're already raising rates and cutting credit lines," said Rep. Carolyn B. Maloney, D-N.Y., whose Credit Cardholders Bill of Rights, which mirrored the Fed's proposals, passed the House in September, but was not voted on in the Senate. "They've fought these regulations tooth and nail, even before this crisis. Now, even though the cost of money is at record-breaking lows, they're complaining."

Ms. Maloney and other members of Congress said they intended to propose bills next year that would make into law the rules voted on yesterday.

Sen. Christopher J. Dodd, D-Conn., who proposed a bill this year that would have extended even more protections to consumers, said that for the next Congress, credit card reform would be a top priority for the Senate Committee on Banking, Housing and Urban Affairs, which he leads.

"To restore our economic stability, we must stop credit card companies from ripping off their customers and driving them into deeper and deeper debt," he said.

He called the new rules "a significant step forward in addressing this issue."