The Credit CARD Act: Enhanced Consumer Disclosures
All week long we’ve been reviewing the major provisions under the Credit CARD Act and what they mean for you. So far we’ve covered the new laws governing interest rates and account changes, fee restrictions, and student credit card protections. Next on the list we’re covering the new consumer disclosure rules.
Not only does this section of the law help provide a much-needed level of transparency in regards to the time it takes to pay off credit card debt, it also put an end to one of the most popular (and annoying) marketing campaigns of all time. You know the one, featuring a group deadbeat 20-somethings living in their parents basement and singing a tune? Yep, thanks to enhanced consumer disclosures, those deadbeat 20-somethings are looking for a new gig. Here’s what the enhanced consumer disclosures mean for you:
- Your credit card statements must now include a minimum payment disclosure that explains how long it will take you to pay off your existing balance as well as the total cost in interest if you only pay the minimum amount due each month. Additionally, your statement must include the monthly payment required, and interest cost, to pay off the existing balance in 3 years.
- Your credit card issuer must provide easy online access to the cardholder agreement for your account. Likewise, all credit card issuers are required to submit cardholder agreements to the Federal Reserve, which will act as the central repository. Find your credit card agreement with the Federal Reserve Consumer Credit Card Agreement Search tool.
- Companies that advertise “free” credit reports must disclose that the report being offered is NOT the free credit report provided under Federal law at AnnualCreditReport.com. (Read the FTC Amendment)
What you need to know: If your credit card issuer raises your interest rate, they must tell you why. This means if the increase is due to market conditions, increased credit risk due to credit scores, or a decline in credit worthiness – they must provide up to four the reasons for the increase. Under separate legislation, issuers will also be required to provide consumers with the credit score used in making that decision. The effective date for credit score disclosures has not yet been determined.
How do you feel about the new payment disclosures? Were you surprised by how long it would take to pay off the balance by only making the minimum payment? Do you think the 3 year payment disclosure is helpful? We want to hear what you have to say. Share your thoughts in the comments section below.
Join us tomorrow as we wrap up our week long series on the Credit CARD Act and prepare for the new laws that go into effect on Aug. 22 – just a few days away.
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