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]