Reg Z R-1286 NPRM Press Release

FRB: Press Release--Board issues proposed amendments to Regulation Z (Truth in Lending) --May 23, 2007

Press Release

Release Date: May 23, 2007

For immediate release
The Federal Reserve Board on Wednesday issued for public comment proposed amendments to Regulation Z
(Truth in Lending) that are intended to improve the effectiveness of the disclosures consumers receive in
connection with credit card accounts and other revolving credit plans by ensuring that information is
provided in a timely manner and in a form that is readily understandable.
“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. “Greater clarity in credit disclosures allows consumers to make
more-informed credit decisions and enhances competition among credit card issuers.”
The proposed amendments principally focus on the rules for open-end credit accounts that are not homesecured, chiefly general-purpose and retail credit card plans. The proposal would require changes to the
format, timing, and content requirements for credit card applications and solicitations and for the disclosures
that consumers receive throughout the life of an open-end account, including account-opening and periodic
statements. These changes largely reflect the result of consumer testing conducted on behalf of the Board
as part of its comprehensive review of the open-end credit rules.
“One significant novel aspect of the Regulation Z review has been the extent of consumer testing by the
Board,” said Federal Reserve Board Governor Randall S. Kroszner. “Although we have used consumer focus
groups in the past to study the effectiveness of consumer disclosures, the proposed changes are based on
one-on-one consumer interviews to assess consumer understanding and use of disclosures. This testing
helped us to identify the key information consumers need to make informed choices about how they use
their accounts.”
Disclosures accompanying credit card applications and solicitations would highlight fees and the reasons
penalty rates might be applied, such as for paying late. Creditors would be required to summarize key terms
at account opening and when terms are changed. Periodic statements would break out costs for interest
and fees. Two alternatives are proposed regarding the “effective” or “historical” annual percentage rate
disclosed on periodic statements. The proposal would also expand the circumstances under which
consumers receive written notice of changes in the terms applicable to their accounts, including requiring an
advance notice before a penalty is required, and increase the amount of time these notices must be sent
before the change becomes effective.
The proposal follows the Board’s comprehensive review of the open-end credit rules (other than homehttp://www.federalreserve.gov/newsevents/press/bcreg/20070523a.htm (1 of 2) [3/5/2008 10:36:46 AM]

FRB: Press Release--Board issues proposed amendments to Regulation Z (Truth in Lending) --May 23, 2007

secured) and takes into consideration comments from the public on two previously issued advance notices of
proposed rulemaking.
The Federal Register
ends 120 days after publication of the proposal in the Federal
Register
, which is expected shortly.

notice is attached. The comment period

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G-10 (A) Applications and solicitations model form (credit cards)
G-10 (B) Applications and solicitations sample (credit cards)
G-10 (C) Applications and solicitations sample (credit cards)
G-10 (D) Applications and solicitations model form (charge cards)
G-10 (E) Applications and solicitations sample (charge cards)
G-17 (A) Account-opening model form
G-17 (B) Account-opening sample
G-17 (C) Account-opening sample
G-18 (A) Periodic statement transactions: interest charges; fees sample
G-18 (B) Periodic statement fee-inclusive APR sample
G-18 (E) Periodic statement new balance, due date, late payment, and minimum payment sample
(credit cards)
G-18 (F) Periodic statement new balance, due date, and late payment sample (open-end plans (noncredit-card accounts))
G-18 (G) Periodic statement form
G-18 (H) Periodic statement form
G-19 Checks accessing a credit card sample
G-20 Change-in-terms sample
G-21 Penalty rate increase sample

Design and Testing of Effective Truth-in-Lending Disclosures (7.7 MB PDF)
Report submitted to the Board of Governors of the Federal Reserve System by Macro International Inc.
Board meeting materials
Statement by Governor Randall S. Kroszner (16 KB PDF)
Submit comment on this proposal
View comments on this proposal
Federal Register Notice 3 MB PDF | TEXT
2007 Banking and Consumer Regulatory Policy

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