Released: May 24, 2007

Fed releases new credit card disclosure proposals

Source: Kathleen Day, Washington Post (Free Registration)

redit card companies would have to disclose interest rates and fees in clearer, easier-to-understand language under proposed new consumer-protection rules that could take effect by year-end.

The proposed rules, which the Federal Reserve Board unveiled yesterday after a 2 1/2 -year study, would be most significant change to the nation’s truth-in-lending regulations in 26 years. The proposal comes as some key members of Congress are intensifying efforts to curb aggressive marketing and pricing practices by retail lenders that consumer groups for years have complained are unfair and deceptive.

The new rules would require companies to tell customers 45 days before terms of a credit card contract are changed, compared with 15 days now. And the rules would expand the list of changes requiring advance notice to include those involving penalty interest rates, which often range above 30 percent. Today, most consumers learn only after opening their monthly bills that they have been penalized with significantly higher interest rates because of paying late, going over their credit limits or falling behind with another lender.

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