As much of the credit card industry frets a possible congressional crackdown on billing practices, Wachovia Corp. is building a niche in the business by offering terms even an industry critic can love.

The Charlotte company returned to the credit card business last summer, issuing cards with relatively lenient rules, such as absolution for one late payment every 12 months. About 800,000 people have signed up for a card, Wachovia card executive Steve Boehm told the Observer last week. The company has amassed about $1.2 billion in outstanding card loans, placing it among the nation's 25 largest card issuers. The industry faces mounting criticism from leading Democrats on the Senate and House committees that regulate the industry. Issues include rising penalty fees, rules for counting payments that favor lenders, arbitrary interest rate increases and -- a capstone of sorts -- the general absence of serious attempts to explain the rules to customers.

The industry says its increased emphasis on penalty fees allows most customers to avoid fees, rather than subsidizing the cost of serving the bad apples. In 2005, about 35 percent of active American credit card accounts were assessed a late fee at least once; according to a fall report by the Government Accountability Office. Playing nice was a business decision for Wachovia. It is issuing cards primarily as an amenity for its own banking customers. The cards are meant to tie customers more closely to the bank. Angering people with fees would be counterproductive, so Wachovia decided to forego some possible card revenues in the hopes of winning more of the customer's business. Executives at Wachovia, the third-largest retail bank, have cited the similar model of Wells Fargo & Co., the fourth-largest bank.

But the choice limits Wachovia's share of the industry's huge profits. Bank of America Corp. and JPMorgan Chase & Co. sell cards aggressively to noncustomers, and reap much of their revenues from fees. Bank of America posted $1.2 billion in profits from credit cards last quarter, about a quarter of its total profits.

Selling cards to existing customers means Wachovia can spend less on marketing. It can also make better choices about creditworthiness, reducing losses from defaults.

Wachovia sold its credit card business in 2000. Until last year, MBNA Corp., issued cards with Wachovia's name, but kept most of the profits. When Bank of America Corp. bought MBNA last year, Wachovia claimed a $100 million break-up fee and used the money to start all over again. Bank of America and Wachovia both are wooing the roughly 3 million holders of the Wachovia/MBNA card. The 800,000 Wachovia cards issued so far is some indication of the smaller bank's success, but the number includes people who never had an MBNA card, and some who may have accepted a Bank of America card, too.