Many open-end credit lines already capitalize interest, i.e., finance charges are added to principal balance at the beginning of the next statement cylce. The real issue here is a safety and soundness issue. The bank can't automatically allow payments to the credit line be made out of the credit line. The line would never be past due until the credit line was exceeded. While I don't think that you will find a regulation prohibiting it, I think that this presents a very false picture of past-due activity and I would think that you would be criticized for it by the safety and soundness examiners.
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