Credit Card Disclosures Under Fed's Microscope

Early public comments regarding credit cards sent to the Federal Reserve Board are looking for easier-to-understand credit card terms. This could mean anything from bolder, larger, more prominent due dates to guaranteed credit card terms. Or, according to one Floridian and quoted on courant.com, having a credit card company “gutted, fined, and shut down.”

It’s been awhile since the Fed has taken a look at credit card regulations – and what it’s discovering is a wealth of credit card users who don’t really understand the credit cards they’re using. In a one-to-one survey, where the Fed called individual credit card users, most didn’t understand or could not explain the terms they had agreed to.

About a month ago, the Fed proposed a string of changes that might soon be reflected in credit card statements:

• Issuers would have to give 45 days’ notice, up from 15, when they change the terms of a credit card agreement.
• Customers would have to be notified in writing 45 days before their interest rate was raised because of a late payment or default.
• Creditors couldn’t claim in ads that an interest rate was "fixed" unless the rate truly did not change or would not change for a specific period stated in the ad.
• Card issuers would have to disclose in the table of terms the fees for late payments, exceeding credit limits, cash advances, balance transfers and returned payments.
• Issuers of sub-prime credit cards would have to provide extra disclosures so consumers understand that large upfront fees would significantly erode their available credit.
• Creditors would have to state the payment due date on the front of the monthly statement and, nearby, post the cutoff time if it is before 5 p.m. on that date.