In a major victory for consumers, the House Banking Committee yesterday approved legislation that would allow easy comparison of interest rates paid on bank accounts by competing institutions.

The bill would require that advertisements for certificates of deposit and interest-bearing checking accounts state the yield with greater prominence than the interest rate. Current regulations give equal play to the two figures. For example, a 6.25 percent interest rate might yield 6.50 percent at one institution and 6.43 percent at another, depending on the method of compounding interest.

Making the annual percentage yield (APY) the most important figure would effectively eliminate the confusing practice of advertising high "teaser" rates for a short period of time, followed by a lower rate. Since the bank would have to give the APY of the combined rates, the customer could judge whether the promotional rate actually resulted in more interest paid over the year. An APY would also be required for accounts of less than one year maturity.

Print advertisements -- but not radio and television -- would also be required to disclose the annual rate of simple interest, all minimum balance and time requirements to get the offered rate, and a statement of early withdrawal penalties and regular fees that could reduce the yield.

Banks and thrifts would be required to make available to existing and prospective customers a schedule of fees, charges, interest rates and terms and conditions applicable to all accounts.

The other major provision of the bill was an amendment to require that interest be calculated on the full amount of principal. A recent survey by the American Bankers Association found that 13 percent of banks pay interest only on part of what the customer has on deposit. Some banks refer to this as the "investable balance" -- the amount left after the bank subtracts a "reserve" that may range from 3 percent up to 12 percent on a Super NOW account with unlimited checking privileges. That means that on an account of $1,000, some banks now calculate interest on as little as $880 of principal.

The bill, sponsored by Rep. Richard H. Lehman (D-Calif.), was approved on a voice vote.

At yesterday's markup session, committee Chairman Fernand St Germain (D-R.I.) said, "We failed to obtain approval of the bill in {the Senate} in the 99th Congress, but we are hopeful that this new effort will pass the Senate and be signed by the president." If it passes, the Federal Reserve Board would have one year in which to draft regulations to implement the law.