The Fed Demands Truth in Lending
In the credit card world, “fixed” doesn’t necessarily mean “fixed”. For example, credit card companies who advertise fixed interest rates aren’t obligated to leave those rates in place forever, or even for very long. The rates are fixed for as long as the company wants them to be. All the companies have to do is give two weeks’ notice before the changes take place.
If the Federal Reserve Board has its way, such practices will soon be a thing of the past.
The Fed has proposed amendments to Regulation Z, the “Truth in Lending” regulation. One such proposed amendment calls for card issuers to mean what they say when advertising fixed interest rates. Under the proposal, issuers who offer fixed interest rates would indeed have to leave those rates fixed for the life of the card, or for a clearly specified period of time.
“The goal of the proposed revisions is to make sure that consumers get key information about credit card terms in a clear and conspicuous format and at a time when it would be most useful to them,” said Federal Reserve Board Chairman Ben S. Bernanke.
Additionally, the Fed wants card issuers to give 45 days notice instead of the standard 15 when interest rates are increased. The reasons for rate hikes would also have to be clearly explained to the customer. Also, credit card companies would be required to put rates and fees in an easy-to-read, itemized list.
Says Bernanke, “Greater clarity in credit disclosures allows consumers to make more-informed credit decisions and enhances competition among credit card issuers.”
chris miller said,
October 16, 2007 @ 12:50 pm
Bank of America USED to be a great company for a credit card. Not so anymore! They use the following tactics once you are a longterm customer: switch your due date, increase your interest rate if your balance is LOW, hold payments for processing if received within the five days of the due date (I have proof of this!) then they wack you for the late fee. I suggest sending payment via registered mail - caught them three times doing this then cancelled them. Funny though, when I sent a check to pay off the balance and CLOSE the account, the check was received and cashed within two business days!! They are a ripoff just like many of the others. I do not even use their ATM’s anymore! Report them as often as you can to your State Consumer Protection office - every time they receive a bad report it is logged and maintained perpetually - so it shows a history which could eventually lead to freezing them!!