Bank of America on Monday announced that starting December 1, it will be sending out new, simplified credit card statements to 40 million current BofA cardholders. According to BofA, the new statements will contain a clear, simple one-page summary of the cardholder’s interest rates, fees, and payment information.
“Our goal is to communicate clearly and make it as simple and easy to understand as possible so that cardholders can use credit wisely,” said BofA Global Card Services President Ric Struthers.
While Bank of America claims the initiative as part of ongoing advances in the bank’s customer service, the new statements essentially just give BofA a head start on some of the changes card issuers are required to make under the new Credit CARD Act. By February 22, 2010, card issuers must clearly disclose credit card interest rates, fees, and their effective dates in an easy-to-understand table format on all credit card statements. The idea is to educate consumers about the consequences of their credit card usage and help them make more informed choices about their finances.
In particular, the new credit card statements will be required to give cardholders clear information about the cumulative costs of their credit decisions. The new credit card bills must show the total amount of interest and fees that have accrued on the card, not just for the month, but for the year to date. In addition, the new credit card statements must show how long it would take to pay off the existing balance on the credit card—and the total interest cost—if the cardholder paid only the minimum due. The statements will also have to display how much cardholders would have to pay each month, if they wanted to pay off the existing balance in 36 months, and what the total interest cost would be.
According to Bank of America, its new statements aim to give clearer information about credit card interest rates and fees. However, the BofA announcement is mum about complying earlier with the most important part of the new rules for credit card statements, i.e. the requirements to clearly show the cumulative costs of interest rates and fees, and the consequences of paying only the minimum monthly payment. For that, cardholders will have to wait until February 22, 2010. Or, if you’re curious, you can use this handy little calculator to calculate for yourself the true cost of paying the minimum on your credit cards.
