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New credit card disclosure rules

By Leslie McFadden ·
Thursday, July 1, 2010
Posted: 11 am ET

New credit card disclosure rules for solicitations, agreements and periodic billing statements take effect today as part of reforms approved by the Federal Reserve Board in December 2008. According to Nessa Feddis, VP and senior counsel for regulatory compliance at the American Bankers Association, an industry trade group, these are some of the key changes:

  • Credit card offers will have an updated look and new formatting requirements. For example, the fees and APRs must be displayed in bold text, and the interest rates must be  in 16-point font as well. Fees will be summarized in their own table. Actual credit card offers will look very similar to the sample credit card offer on the Federal Reserve's website. "Anybody varying from the model is going to be taking a bit of a risk," Feddis says.
  • If approved for a new credit card, you will receive a one-page agreement summary with the card. "You will still get the agreement ... it will still be a 12-page, 15-page document," Feddis says, but the key terms will be highlighted in a table similar to the one required for credit card offers.
  • Periodic statements will be easier to read. "The important information will be right up front in these boxes," she says. A summary of the account activity and payment information will be at the top in boxes, and the payments summary will group the due date, new balance, and minimum payment balance together. The account summary must include, among other details, the statement closing date, payments and credits, purchases, the previous balance and the credit limit. My story, "10 changes to your credit card billing statement," goes into more detail about the new disclosure requirements.
  • Billing statements will also be more informative. A minimum payment warning will show how much it will cost and how long it will take to pay off the balance by making only the minimum payments. You will also see monthly and year-to-date totals for fees paid and interest charges.
  • If account changes are on the statement, they must be displayed in a box near the top of the document.

How to make the most of the disclosure changes

When you receive your contract summary, file it away for future reference. It will summarize the key terms of your card, including your interest rates and fees, and may come in handy when you need to compare your cards before using one for a large transaction. Or, if you just need a quick reminder of the interest rate or a particular fee.

Feddis says that account changes can be disclosed on the statement or in separate letters. To play it safe, open any correspondence from your issuer.

In other news, the House of Representatives approved financial reform legislation yesterday with a vote of 237-192. The Senate, which must sign off on the Dodd-Frank bill before President Barack Obama can sign it into law, postponed a vote until after the July 4 recess. H.R. 4173, a bill that would provide access to free credit scores for some applicants and limit interchange fees for debit card transactions must wait to become law.

Do you find any of the credit card disclosure changes useful?

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July 16, 2010 at 6:05 am

This is a wonderful opinion. The things mentioned are unanimous and needs to be appreciated by everyone.


July 01, 2010 at 5:23 pm

Got it...thank you for your help.

Leslie McFadden
July 01, 2010 at 4:30 pm

When the promotional rate on the first balance transfer expires, the rate on that balance will jump to 9.99 percent. At that point, you will have different interest rates (one at 9.99 percent and one at 1.99 percent from the other balance transfer). Nothing will be applied to the 18.99 percent balance until the promotional rate for that second balance transfer expires -- that is, you don't have a 18.99 percent balance at the moment.

July 01, 2010 at 3:26 pm

Just to clarify anything I pay over minumum should be applied to the 18.99% regardless if they both have the 1.99% rate for the first 12 months?

Leslie McFadden
July 01, 2010 at 3:14 pm

Chris, if you have multiple interest rates and pay more than the minimum, the amount above the minimum must be applied to the balance with the highest interest rate. The minimum payment itself can still be applied to the balance with the lowest interest rate.

July 01, 2010 at 2:48 pm

How will payments be applied to an account with multiple interest rates? For instance Citi Cards gave me balance transfer at 1.99% for 12 months. After that the balance will be charged 9.99%. Then they just offered me a second balance transfer, same as above accept after the 12 months the balance will be 18.99%. Is this a way for the credit card company to get around paying the higher interest rate down first since technically they are both 1.99% for the 12 months?