Luckily Adam Levitin over at Credit Slips read them for us (click here for his summary). Here are a few highlights from his post:
(1) Card issuers must provide consumers a reasonable amount of time to make a payment before it is considered late. If the bill is mailed (or delivered) at least 21 days before the due date, it is considered reasonable. The proposed rules would also require a payment received before 5pm EDT to be treated as timely and to have payments received the day after a day on which the USPS does not deliver mail treated as if received the day before. This is an important step I think the provision could have been drafted better, however. First, the safe harbor should be presumptive, not conclusive. Second, it raises the question of what constitutes proof of mailing? Can an issuer prove that it mailed the bill 21 days before absent a USPS certification? And third, what about the Providian problem of deliberately miscoding return envelopes? Nothing in this rule prevents that. Likewise, it does not create any procedure whereby a consumer can prove on-time delivery absent USPS certification, etc.
(2) Payment allocation. Issuers are required to allocate payments to balances accruing interest at different rates in one of three methods (highest rates first, pro rata, equal amounts to all balances) or a method more favorable to the consumer. This is a very good provision. I would have preferred to have the equal amounts option be eliminated, but it is an improvement on the current situation.
....(6) Fee harvester cards are limited to charging initial account opening fees of no more than 50% of the line of credit and any fees over 25% of the line of credit must be spread out over the course of a year. Also, there is an increased opt-out (not of a lot of value, if you ask me, given the sophistication of fee harvester card users). How the Fed came up with 50% is anyone's guess. It strikes me as ridiculous to have to pay a $150 fee for an effective $150 credit limit ($300 nominal limit, half taken up by the fee). I would think a more reasonable number should be in the 10%-20% range.
(7) When making firm offers of credit, issuers must specify the criteria for determining APRs and credit limits. This can be satisfied with meaningless boilerplate language: “If you are approved for credit, your annual percentage rate and/or credit limit will depend on your credit history, income, and debts.” Gee, that's a helpful disclosure. I suspect anyone who doesn't know that also doesn't read disclosures. It's not a harmful provision, but let's not pretend that this is a useful disclosure provision.
Notably, the rules do not address several other serious problems with credit card billing practices.
First, they do not make any attempt to address universal cross default.Second, they do not prohibit or limit unilateral term changes other than barring retroactive applications of increased APRs to existing balances.
Third, the do not limit the number of overlimit fees that may be applied in a single billing cycle or give consumers the option of opting out of overlimit transactions.
Fourth, they still permit the accrual of residual interest.
Fifth, they do not limit the application of finances charges to fees incurred in that billing cycle.
Sixth, they allow the application of finance charges from the transaction date, rather than from the posting date (when the issuer actually extends financing).
Seventh, the proposed rules do not limit pay to pay fees.
Eighth, although they lop off two-cycle billing, they don't eliminate the imposition of finances charges on balances paid off on time when part of a balance is not within the same cycle.
And ninth, they fail to institute definitions for terms like "Prime Rate" and "Fixed Rate".
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