WASHINGTON (5/4/09)--The Credit Union National Association (CUNA) is seeking comments on the Federal Reserve Board’s proposed amendments regarding open-end credit rules under Regulation Z. The proposed changes--effective July 1, 2010--would affect disclosures for credit cards and other credit plans. In December, the Fed issued a final rule that changes the open-end credit rules under Reg Z. The proposed changes are intended to resolve uncertainties and make other technical changes to the rule, although they are not intended to change the level of protection. Comments are due to CUNA by May 22. Among the changes, the proposal would:
* Clarify that an issuer offering a deferred or waived interest plan may not disclose this with an annual percentage rate (APR) of 0% due to the possibility that the consumer may not need to pay the interest if the balance is paid before a certain date; * Provide an exception to listing a specific APR in account-opening disclosures when the rate varies on a consumer’s creditworthiness; * Continue deferred and waived interest programs as long as they comply with the other requirements under Reg Z and the unfair and deceptive acts of practices final rule. However, the programs would have added disclosure requirements--including the amount of the deferred or waived interest balance and interest charges and fees for the statement period and the calendar year-to-date; * Provide an exception for the rule issued last year that requires creditors to provide a 45-day notice of a change in a term disclosed in the account-opening summary table. Under the proposal, the requirement would not apply when the change is applicable only to checks that access a credit card account; * Clarify an exception to a 45-day notice requirement when an interest rate is increased due to a consumer’s delinquency or default. The exception would apply when there are temporary hardship arrangements where the rate is lowered; * Underscore that during an investigation of unauthorized transactions, a creditor may require a consumer to sign a statement supporting the claim; * Implement and clarify advertising requirements for deferred or waived interest programs in which interest does not need to be paid if the balance is paid by a certain date. Model language is also included in the proposal for creating the disclosures.
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