In the world of credit, there are some vicious, unscrupulous lenders. What should you do while wandering this scary wilderness? For once, The Man has your back. The Truth in Lending Act (TILA) should arm and protect you against the beasts of the finance forest.

TILA, also known as Regulation Z, was enacted by the government in 1968 and became effective in July 1969. Since then it's been amended and simplified multiple times in an effort to help it better achieve its purpose of ensuring that credit terms are explained so consumers can make informed choices when comparing. It also helps protect consumers against inaccurate and unfair credit card and credit billing practices.

TILA is a Swiss Army knife of an act. It not only requires disclosure (creditors have to be explicit), but also requires that creditors use uniform terms that can be easily compared. It allows borrowers to rescind (or back out) of a loan within three days with no questions asked, regulates credit advertising by ensuring that lenders can't offer you something that doesn't exist, and encompasses closed-end (most real estate and auto loans) and open-end (credit cards and home equity) credit offers.

Credit card applications and solicitations are common examples of TILA regulation. Applications and solicitations are required to disclose annual percentage rate (APR), any variable rates, how long the grace period is, how the balance is computed when interest incurs, and all related fees and charges. Most of this information must be included in a table known as the Schumer Box.

Though TILA requires disclosure of the APR, cards can now have as many as five APRs that apply at different times. The Federal Reserve Board helps by defining some terms for you and providing a survey of credit cards, so you can compare options.

You should always read the fine print on a credit card contract before signing up. Don't feel foolish if you can't understand all of it--some lawyers even have trouble with it--which is why the Federal Reserve Board (which regulates TILA) is proposing changes. The changes would revise the fine print and require more tables, bold font, and bigger font sizes for key terms and conditions. A ruling is expected in late 2008.

Until then (and even after) compare cards and rates at MSN Money's Credit Card Analyzer, use the Schumer Box, and think before you swipe. No matter what TILA says, The Man can't help you if you're not helping yourself
 

Sources: ftc.gov; fdic.gov; bankrate.com; gpoaccess.gov; investopedia.com; creditcards.com; federalreserve.com; responsiblelending.org; moneycentral.msn.com