Federal Reserve targets confusing credit card mailings

WASHINGTON — Confused by the fees and terms of your credit card? The Federal Reserve wants to make your monthly bill and solicitations that arrive in your mailbox easier to understand.

The Fed also wants companies to give people more than a month — 45 days — notice before making any changes to the terms of an account, including slapping on a higher penalty rate for missing payments or paying bills late.

Under current regulations, credit card companies in most cases provide 15 days notice before making certain changes to the terms of an account, the Fed said. However, under current regulations creditors need not inform a consumer in advance if the interest rate to an account increases due to default or delinquency.

The extra time would give people an opportunity to pursue their options, including switching to another credit card provider.

“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,” Fed Chairman Ben Bernanke explained Wednesday. “Greater clarity in credit disclosures allows consumers to make more informed credit decisions and enhances competition among credit card issuers.”

People now often have to wade through tiny print and dense language to get information about the terms of their credit card. When terms — including rates and fees — are changed, that can be on a separate piece of paper accompanying the monthly statement. Those separate inserts aren’t always looked at, the Fed said.

To help, the Fed’s proposal would call for a table summarizing the changes to appear on the statement.