This federal law was enacted in 1968 to help protect consumers in their dealings with lenders and creditors.

 

The TILA was implemented by the Federal Reserve Board through a series of regulations.

 

Some of the most important aspects of the act concern the information that must be disclosed to a borrower prior to extending credit, such as the annual percentage rate (APR), the term of the loan and the total costs to the borrower. This information must be conspicuous on documents presented to the borrower before signing and in some cases on their periodic billing statements. Some of the highlights of this law include the following:

 

• Card companies are prohibited from opening a new account or increasing the credit limit on an existing one without first considering the consumer’s ability to pay

• Credit card issuers are required to give consumers at least a 45-day notice before charging a higher interest rate and at least a 21-day “grace period” between receiving a monthly statement and a due date for payment

• Card companies are required to disclose on statements that consumers who make only minimum payments will pay higher interest and take longer to pay off the balance

• Fee for using mail, phone or electronic payment method are eliminated, except when using an expedited service

• Companies are prohibited from charging fees for over-the-limit transactions unless the cardholder opts into this form of protection

• Card companies are prohibited from offering gift cards, t-shirts or other tangible items as marketing incentives for signing up for a card