July 22, 2008 at 9:00 AM ET
Hate hidden fees and other “gotchas” from credit cards and banks? You have until Aug. 4 to sound off about it.
In May, the Federal Reserve proposed a sweeping set of rule changes that would ban a wide set of consumer-unfriendly bank practices. The rules would prevent credit card issuers from charging retroactive rate increases on outstanding balances, for example, and ensure that bills are mailed at least 21 days before the balance is due. It would also make it harder for banks to change overdraft fees in some cases, and clarify a wide set of bank practices that sometimes seem like booby-traps designed to cost consumers.
The proposed rules are now open to public comment, but only until Aug. 4. Consumers who would like to make their opinions known about the new regulations can simply fill out a form on the Fed's Web site and leave comments there. Here's a link. Scroll about two-thirds of the way down the page and look for the words “submit comment.”
Consumers should know that all comments will be made available to the public on that same Web site. In fact, already 31,000 comments have been made, though the Fed says 19,000 of those came via form letters. Still, according to CreditCards.com, the Fed's credit card proposals have drawn the second-most public comments ever, eclipsed only by a proposal involving real estate rules dating to 2000.
Sometimes, it's not good to know how the sausage is made. But credit card and bank rules are too important to leave to the sausage makers, and fortunately, all comments made so far are available for public inspection. They are worth at least a casual browse.
You can see a list of all 12,000 or so online comments here, but don't click on this link unless you have patience and a high-bandwidth connection.
A much shorter sampling of comments can be seen here.
So far, the comments are overwhelmingly positive about the new rules, and encourage banking regulators to adopt them as soon as possible. But many comments are brief and some are full of simple name-calling.
"I recently had a WaMu credit card raise my interest rate by 60% and my minimum payment by 30% without explanation," is the entire comment left by a typical frustrated writer.
If you'd like to leave a more thoughtful comment about credit card and bank policies, you can read more about the rules in msnbc.com's prior coverage here.
You can also try to dig through the full text of the draft proposals, though they are a beefy read.
You will find satisfyingly detailed nuggets however, such as a rule that would "prohibit creditors from setting a cut-off time for mailed payments that is earlier than 5 p.m. at the location specified by the creditor for receipt of such payments." Many card companies now say the payment deadline is 1 p.m. on the due date, putting consumers at the mercy of the post office and the mailroom guy.
The rules also call for an end to some unhelpful bank euphemisms, such as the “grace period.” Banks instead will be forced to use plain language like “how to avoid interest.”
Detailed commentaries are still expected from industry groups and individual banks; these are likely to be relentlessly critical of the proposals. Immediately after the new rules were announced, the American Bankers Association issued a press release saying the regulations are "effectively price controls, which have never worked in the past, and we do not believe they will work here." Limiting the interest rates and fees that banks can charge troubled customers will end up forcing the institutions to charge higher rates to good customers, the association argues. "These rules will result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards," the bankers claimed.
While most banks have so far pulled their punches, hidden within the public comments are hints about the arguments banks will make. Officials from several financial institutions have met with regulators separately to express their concerns about any new consumer protections; notes from these meetings have been posted as comments. In one such note, American Express officials plead with regulators to postpone implementation of any changes for 18 months after adoption to allow "adequate time for system changes, staff training, testing, and integration." Other banks asked for similar 18-month timetables. During its meeting, Amex took issue with other proposals, such as a requirement that banks provide written notice before raising a consumer's interest rate.
"We ... continue to believe no additional prior notice should be required where the penalty (interest rate) has already been disclosed to consumers and is part of their account terms," American Express officials said, according to the note.
Little guys get in on the debate
Smaller lending institutions are also getting in on the discussion. In a letter send by Jeffrey Hubbard, vice president of risk management at Merrimack County Savings Bank in New Hampshire, the lender says technology limitations would prevent the bank from allowing consumers to opt out of overdraft protection when using debit cards to make withdrawals or buy things, but leave it in place for written checks.
"We wish to point out that a true opt-out of the payment of overdrafts related to ATM and (point of sale) debit card transactions is not feasible," he writes
To find more industry comments, click on the “all comments link” and look for links to comments that were not left by an individual.
Consumers, while mostly positive, also offer some criticism of the proposed Fed rules. Chief among them: They want banks to stop imposing overdraft fees when a bank has received a deposit that would cover the payment but has not yet been credited their account.
"I support your plan to ban overdraft fees on debit holds. Please go one step further and ban overdraft fees when the funds are in my account but haven't cleared yet," wrote Jim Flammio of Tacoma, Wash.
Other comments sound as if they come from exasperation.
“Give consumers a break,” wrote Edward Dunne of Tampa, Fla., in his brief note
Consumers have two more weeks to give regulators their views.