Consumer Payment Card News

Disclosure

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You might be able to throw away the magnifying glasses when it comes to reading the fine print of a credit card solicitation. The Federal Reserve has proposed a number of changes to make the financial terms listed in the disclosure box more clear and conspicuous. Under the new rules the go-to or regular interest rate must be noted in 18-point type while other card terms must appear in 12-point type. Most card issuers currently use 6-point or a smaller type size to display credit card terms on applications. Among the Federal Reserve’s proposed amendments to Regulation Z of the Truth in Lending Act, is a new rule requiring issuers to disclose in solicitations, the “specific events” that will trigger a punitive interest rate. Several issuers currently use vague language such as “failure to meet terms of the account” or a “change in creditworthiness”. Others specify the number of late payments over a certain period of time that will trigger the punitive rate or that exceeding the credit limit will trigger the higher APR. It appears the Fed is looking for a clear description of the “specific events”. The Board is also considering adding disclosure in credit card solicitations/applications in regard to the APR charged for balance transfers and cash advances. Consideration is also being given to including disclosure on any balance transfer fees. The Fed is also asking for public comment on applying the type size requirements to disclosures made using electronic communication. The comment period expires July 18. If you would like to add your two cents, send an email to regs.comments@federalreserve.gov. You can also use snail mail and send your comments to Ms. Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551

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