Closed-end Credit

The key disclosures for closed-end credit transactions are as follows:

• The “amount financed”, which is “the amount of credit provided to the consumer (or on the consumer’s behalf) (12 C.F.R.$1026.18(b).

• The “finance charge”, which is “the dollar amount the credit will cost the consumer” (12 C.F.R. S1026.18(c)). It includes “any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to, or a condition of, the extension of credit (12 C.F.R.$1026.4(a)).

• The “annual percentage rate” (APR), which is the finance charge expressed as an annual rate (12 C.F.R. $1026.18(e)).

  • Do not obtain credit based solely on the monthly payment.
  • Consumers should always shop for credit, comparing the APR.
  • Consumers should not agree to credit terms based solely on a monthly payment.

Open-end Credit

The key disclosures for open-end credit are the APR and fees.

Fees are disclosed separately and do not affect the APR. Other disclosures include a “Minimum Payment Warning” and examples of the length of time required to repay the balance if only the minimum payment is made (15 U.S.C. $1637(b)(11)).

There are disclosure requirements (a) for applications and solicitations (15 U.S.C. S1637(c)), (b) that must be made prior to opening an account (15 U.S.C.

$1637(a)), (c) for periodic billing statements (15 U.S.C. $1637(b)), and (d) prior to renewal of an account (15 U.S.C. $1637(d)).

Additional disclosure requirements apply if the open-end plan is secured by the consumer’s principal dwelling, such as in the case of a home equity line of credit (15 U.S.C. $1637(a)).

There are generally no limits on the rate of interest that can be charged on a credit card. Consumers need to read contracts before they sign them.

The law charges you with knowledge of the agreement whether or not you read it. Assume that oral representations about the contents of a document that are inconsistent with the actual contents are not enforceable, with a few exceptions.

The law requires disclosure of key credit terms.

 It is important that you obtain the disclosures, review them, and understand what you are getting into.

Contact us any time for a free consultation if you have any questions or would like more information.