(Bloomberg News) The U.S. Federal Reserve proposed two rules that would raise consumer protection coverage limits for credit transactions and leases.

The rules would increase the limits to $50,000, according to a Fed statement today. Amounts will be adjusted annually to reflect any increase in the consumer price index, the Fed said. Consumer loans of more than $25,000 are generally exempt from the protections of the Truth in Lending Act, and leases where the consumer's total obligation exceeds $25,000 are also exempt from safeguards of the Consumer Leasing Act.

The Truth in Lending Act requires creditors to disclose important terms of consumer loans and prohibits lenders from engaging in certain practices. The Consumer Leasing Act requires lessors to provide consumers with disclosures regarding the cost and other terms of personal property leases, such as automobile leases. The $50,000 limit for leases would apply to everything consumers are required to pay under the lease excluding taxes, the Fed said.

The financial overhaul bill enacted July 21 included a provision to extend coverage to $50,000 effective July 21, 2011.

Consumer Credit

Consumer credit climbed by $3.38 billion in October after increasing a revised $1.23 billion in September, the Fed said December 7 in Washington. Non-revolving loans rose for a third month as federal government education-related lending jumped an unadjusted $31.8 billion.

The report showed credit-card debt fell for a 26th consecutive time, as Americans continue to pay down debt, one reason spending has been slow to recover. Car sales last month climbed to the highest level in a year and holiday purchases have perked up, indicating households may soon start borrowing again.

Private education loans and loans secured by real property, such as mortgages, are already covered by the Truth in Lending Act, regardless of the amount of the loan.