More disclosures on credit card statements mandated for February

The Federal Reserve proposed 841 pages of rules designed to protect consumers from costly credit card practices. These proposed rules, if adopted, will take effect in February and represent the second stage of the Federal Reserve's implementation of the Credit CARD Act signed into law by President Obama in May.

Bill Hardekopf, CEO of LowCards.com, discussed these new rules with me by email. The following is a summary of the new disclosures the Federal Reserve will now require from credit card issuers beginning with your February credit card statements:

* Credit card companies must issue a warning about the hazards of only making the minimum payment. Paying only the minimum payment increases the interest you will pay and the time it takes to pay it off. This warning must be placed in a table and shown in a prominent location. Pay close attention to this new box. It will help to remind you that you need to make every effort to pay more than the minimum due on your credit card.

* Disclose the total cost and the time it will take to pay off the entire balance if you only make the minimum payment. Look carefully at these new cost statements. Get to know what it's costing you to pay only the minimum.

* Disclose the monthly payment amount required to pay off the balance in 36 months and the total cost of paying off the balance in that three-year period.

* Disclose the fee and the penalty APR that the cardholder could receive after a late payment. Must also include the earliest date on which the late fee can be charged.

* The due date must be the same numerical day and month for each billing cycle. This predictability makes it easier for cardholders to make their payment on time. If the due date is on a holiday and a mailed payment arrives on the day after the holiday, the payment is to be considered on time.

* Prohibits fees for making a payment, except payments involving expedited service. So be sure to pay your credit card bills when you get them rather than put them aside and then forget about it until the last minute.

* Credit card issuer must provide contact information for at least three debt counseling services that have been approved by the United States Trustees.

"The Federal Reserve consumer-tested these disclosures to help make them easier for cardholders to understand. Issuers must use specific language in these warnings," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

I hope people use this new information to get a better handle on their credit card usage and minimize the interest they must pay. If you want to find a way to pay down your debt more quickly, think about using the snowball effect.

Lita Epstein has written more than 25 books including The Complete Idiot's Guide to Improving Your Credit Score.