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Comment on important federal credit proposals

Thursday, May 22, 2008

Update: Consumer Action has added sample letters for you to edit and email from our site:

• Credit Card Unfair Practices Alert
• Overdraft Protection Alert

There are lots of opportunities to make your voice heard on federal credit proposals this summer. Consumer Action encourages you to go on the Internet and add your thoughts, ideas and reaction to the following proposals:

Regulation AA - Unfair or Deceptive Acts or Practices [R-1314 ]

The FTC Act proposal includes five key protections for consumers that use credit cards:

• Banks would be prohibited from increasing the rate on a pre-existing credit card balance (except under limited circumstances) and must allow the consumer to pay off that balance over a reasonable period of time.
• Banks would be prohibited from applying payments in excess of the minimum in a manner that maximizes interest charges.
• Banks would be required to give consumers the full benefit of discounted promotional rates on credit cards by applying payments in excess of the minimum to any higher-rate balances first, and by providing a grace period for purchases where the consumer is otherwise eligible.
• Banks would be prohibited from imposing interest charges using the "two-cycle" method, which computes interest on balances on days in billing cycles preceding the most recent billing cycle.
• Banks would be required to provide consumers a reasonable amount of time to make payments.

To read more about this rulemaking, visit this link. You will also find a link that you can use to download the entire proposal.

To comment, Click Here.

To view comments, Click Here.

Regulation DD - Truth in Savings [R-1315 ]

The Federal Reserve has proposed banning unfair or deceptive practices related to automatic overdraft protection programs in deposit accounts. Unlike the overdraft protection programs you pro-actively sign up for, automatic bounce protection is not a good product. If you overdraw your account your bank will cover the check but charge you a hefty fee for each overdraft anyway. Regular overdraft protection is an "opt in" program (either via a line of credit or a link to your savings account) that saves you the hefty, multiple fees.

The proposal would give bank customers the right to opt out of automatic bounce protection. (Consumer Action suggests this should be "opt in.") Banks would also have to disclose on periodic statements the total amount assessed in overdraft and returned item fees. At the moment, only those institutions that promote or advertise their overdraft protection programs have to do that. Banks that provide account balances online, by phone or at ATMs would have to disclose how much money is in the account, not including the cushion the bank would cover if you overdrafted.

To read more about this rulemaking, download the entire proposal.

To comment, Click Here.

To view comments, Click Here.

Regulation Z - Truth in Lending [R-1286 ]

Regulation Z, which governs credit card disclosures, would be amended under a proposal that requires new designs for solicitations and cardholder billing statements and a 45-day advance notice of any rate change and the ability to opt out, among other requirements. The Reg Z proposal was amended to better coordinate it with the central bank's new proposal governing unfair and deceptive card practices.

To read more about this rulemaking, download the entire proposal.

To comment, Click here.

To view comments, Click Here.

Risk-Based Pricing Notice - Fair and Accurate Credit Transactions Act [R-1316]

Credit card issuers would be required to provide risk-based pricing notices to any customers who receive a higher annual percentage rate than the lowest rate that the lender is granting its best-qualified customers. The rules contain some exceptions, including an option for lenders to provide credit scores to all of their customers along with explanatory information in lieu of providing risk-based pricing notices.

To read more about this rulemaking, visit this link. You will also find a link that you can use to download the entire proposal.

To submit comments, Click Here.

To view comments, Click Here.

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