New rules eyed for credit card account-opening disclosures

Credit card reform: The fine print of proposed changes to Regulation Z

By Connie Prater

Regulation Z requires creditors to disclose all costs and terms before a new credit card's first use. However, according to the board, "Currently, there are few format requirements for these account-opening disclosures, which are typically interspersed among other contractual terms in the creditor's account agreement."

45 days' notice Fixed rates APR disclosures Fee disclosures Account opening disclosures Periodic statement disclosures Changes in credit card terms Minimum payments Subprime credit cards

The regulators want that to change. They would do away with the option of presenting account-opening information in tiny type legalese. The proposed account-opening disclosure is intended to organize the information in tables and standardize its presentation to allow easier comparisons.

Account-opening disclosures could include descriptions of items such as:

• APR for cash advances
• APR for balance transfers
• Minimum interest charge
• Grace period

According to regulators: "Consumer testing also indicates that consumers may not typically read their account agreements, which are often in small print and dense prose. Thus, setting apart the most important terms in a summary table will better ensure that consumers are aware of those terms."

Discover bank, however, notes: " ... (W)e do not necessarily believe that a table is necessary to convey the required disclosures to consumers in the account-opening context ... " Read more (Page 2)

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Published: December 26, 2007