The new regulations raise the ceiling for credit limits covered by the Truth in Lending Act to $50,000. Under current guidelines, credit card accounts and other unsecured loans over $25,000 need not comply with TILA's strict disclosure rules. Raising the limit would include a growing number of Americans that use high-limit credit cards to cover some real estate and car purchases that would otherwise be secured by their property.
The rule changes bring Federal Reserve policy in line with mandates from the recently passed Dodd-Frank Act. As with other major lending policies, the Dodd-Frank Act sets broad guidelines which Fed policymakers must interpret with specific rules before a specified deadline. In this case, the Dodd-Frank Act instructs the Federal Reserve to amend affected regulations before July 21, 2011. Consumers have until February 1, 2011 to submit comments on the new rules.
About the Author
Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.