In a prior job, I had the opportunity to learn about credit scoring and the credit system in general by working with an analytic team associated with a major bank. While in that role, it’s true that I did encounter a number of policies that were designed specifically in the corporation’s best interests. So, it is with a sigh of relief that I encountered this Washington Post story on new rules for credit card lending being proposed by the Fed:
The new rules would require companies to tell customers 45 days before terms of a credit card contract are changed, compared with 15 days now. And the rules would expand the list of changes requiring advance notice to include those involving penalty interest rates, which often range above 30 percent. Today, most consumers learn only after opening their monthly bills that they have been penalized with significantly higher interest rates because of paying late, going over their credit limits or falling behind with another lender.
Because much of the type in disclosures is so small, many card holders do not bother reading the statements. The new proposal calls for larger type in some instances. It would also require companies to say on monthly statements what interest and fees a customer had paid so far for that calendar year.
Companies would also be required to spell out that low rates on balances transferred from another credit card apply only to that balance, not to new purchases. And it would require companies to apply payments to the debt carrying the highest interest rate. Many companies now apply payments to the least costly debt, thus forcing customers to pay more in interest.
Thank-you!
Granted, this won’t necessarily do anything about the phenomenon of many consumers reading this sort of information (regardless of the font size), but maybe it will help curtail some of the games credit card lenders play to capitalize on folks who don’t read the fine print.