May 27, 2009
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CARD Act of 2009, Pt.3
Plain Language/Plain Sight.The Act requires plain language and plain sight disclosures that are written in language that is easily understood and visable to credit cardholders. Consumers will have greater control over financial responsibilities when they are able to adequately avoid additional fees and costs through the use of these provisions.
· Plain Language in Plain Sight: Lenders must provide consumers clear disclosures of credit card accounts’ terms and conditions prior to consumers opening an account as well as clear account statements displaying all activities going forward. Disclosures must also be provided on any potential fees the consumer may be charged in the future. Monthly credit card account statements will list the precise fees the consumer has paid in the current month and an account of the total year to date fees. A clear explanation must be given on all fees. Disclosure templates must be updated on a regular basis to assure they remain congruent with the changing market and empirical research results. The financial industry must conduct ongoing testing to ensure consumers maintain a clear understanding of all terms and conditions of their accounts and that disclosures are useful and relevant.
· Real Information on the Financial Consequences of Decisions: Credit card lenders must provide a detailed explanation to the consumer regarding the consequences of their credit decisions and the amount they choose to apply to their remaining balance. Lenders will be required to expose the length of time it will take the consumer to pay off the existing balance on their card as well as the total cost of interest if the consumer chooses to continue paying the minimum payment due with no additional amount applied toward the balance. Lenders will also be required to display the required payment amount and total interest cost if the consumer would like to pay the credit card balance off in 36 months.