You Have Until Friday To Tell The Fed That Their Proposed New Credit Card Rules Aren't Enough

The Federal Reserve Board has set this Friday, October 12th, as the deadline for hearing any comments regarding Regulation Z, its proposed set of modified guidelines for the credit card industry. According to experts who aren’t on the credit card companies’ payrolls, the new rules are a weak fix that does little to protect consumers.

Here are some of the new rules:

Credit-card companies [must] use standard, easy-to-read tables for disclosures so that consumers can compare terms much like they compare nutritional information on food labels. It will also require creditors to provide 45-day notices before changing the terms of the account, including imposing penalty rates. Creditors will be prohibited from using the term “fixed” unless an interest rate is really fixed for a disclosed period of time.

But here’s what’s been left out, much to the delight of credit card companies:

In disclosures, creditors will be able to use a broad range of APRs, say “8.99% to 19.99%,” which doesn’t really say much. And while creditors will have to give consumers 45 days notice before they impose penalty rates, they don’t give them the choice to “opt out,” stop using the account and repay it under the old terms.

Most importantly, the proposal doesn’t address some of the industry’s worst tricks, including universal default, retroactive application of rate hikes, changing account terms at any time for any reason, and permitting customers to exceed their credit limit and then imposing an over-limit fee.

So if you want to share your opinion on what you think of Regulation Z and its effectiveness—and among the Consumerist reader pool we certainly have more than a few well-spoken and/or outspoken members who have worthwhile opinions to contribute—then click here to add your voice to the discussion.

“Are Credit-Card Companies Cleaning Up Their Act?” [SmartMoney]

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“Regulation Z – Truth in Lending [R-1286]”
“Credit Card Companies Cheer New Regulation?”
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(Photo: Getty)

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  1. timmus says:

    “creditors will be able to use a broad range of APRs, say “8.99% to 19.99%,” which doesn’t really say much.”

    Better yet, how about 8.99% to 90.0%? Think of how many people will miss that one.

  2. XTC46 says:

    @timmus:

    The scary part is how right you are. As is many people don’t read the terms and Conditions of service, and don’t pay that close attention to their APRs. This kind of stuff is even worse.

  3. alice_bunnie says:

    @xtc46:

    As is many people don’t read the terms and Conditions of service

    Heck, as many people can’t understand them. I’m an accountant and the darn things make my head spin.

  4. Rando says:

    I don’t know a single CC company that doesn’t allow you to opt out of a terms change. That expert obviously doesn’t have any credit cards.

  5. Rando says:

    @alice_bunnie: They’re really not hard to understand…

  6. Pupator says:

    They may not be hard for many of us to understand (the types of people who frequent Consumerist), but we’re likely not the people getting clobbered by credit card debt either. I’m all for personal responsibility and consequences for actions, but making these cards (and the dangers of using them) more transparent can only help people who would otherwise get themselves in trouble.

  7. vex says:

    Vote with your wallet, stop using the cards.

  8. @RandoTheKing: I haven’t seen a credit card that allows you to opt out or close the account and pay off your balance under the old terms of your agreement if you’ve been handed a “penalty” rate change. I think that’s the issue.

  9. olegna says:

    >> (Chase told us they don’t comment on individual cases for privacy concerns and didn’t, by press time, comment on the bank’s policy regarding paperless billing.) <<

    I’ve gotten that line of BS before when I’ve written about CC companies. This is crap: their polices directly affect your credit score. It’s a public policy issue, not an internal corporate-policy issue.

    And why is it whenever these topics come, a lot of people end up in one of two camps:

    #1.) Credit is evil, use cash only, live off the grid, etc.; or

    #2.) If you are “responsible” then you wouldn’t have anything to complain about (which, by the way, is the personal finance version of “if you aren’t doing anything illegal, why would you have a problem with the government secretly monitoring you.”)

  10. Catperson says:

    Is this the same bill that is going to force the companies to apply payments to the portion of the balance with the highest interest rate first, which is the opposite of what they do now? Because I want that to happen, ASAP! I’m paying off some debt but I’m not able to pay it off completely, so I’m getting stuck with higher rate debt for longer because all CC companies apply payments to the lowest rated balance first and refuse to apply it to the higher rated balance even if you present your request in writing.