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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