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OTTAWA, May 20 (Reuters) - The Canadian government will lay out new regulations for the credit card industry on Thursday, following on the heels of a U.S. initiative to limit credit card interest rates and fees.

A source in the Finance Department said on Wednesday that Finance Minister Jim Flaherty would announce the new rules at 10 a.m. EDT (1400 GMT).

Flaherty has promised regulations to improve transparency in the credit card industry, but he was not expected to go quite as far as a sweeping bill passed by the U.S. Congress on Wednesday.

He wants to ensure standard grace periods on new purchases and to make certain consumers know what they will be charged, even going to the extent of making fine print big enough to be more legible, but not impose interest rate caps.

The minister laid out the direction he would take in his January budget, which said Canadians needed "access to credit on terms that are fair and transparent."

The U.S. bill, expected to be signed into law by President Barack Obama within days, prohibits arbitrary rate increases, bans credit card issuers from raising rates in the first year, and takes numerous other steps designed to prevent abuse. (Reporting by Randall Palmer; editing by Rob Wilson)