WASHINGTON (10/20/10)--Credit unions will want to note a proposal just issued by the Federal Reserve Board, one which is intended to help card issuers more fully understand their compliance obligations under changes to Regulation Z. The Credit Card Accountability Responsibility and Disclosure (CARD) Act, enacted in May 2009, made a series of changes to credit card rules, which were implemented under Reg Z Truth in Lending rules. This new Fed proposal is intended to clarify the Fed’s CARD Act rules. Specifically, the proposed clarifications state:
* Promotional programs that waive interest charges for a specified period of time are subject to the same protections as promotional programs that apply a reduced rate for a specified period. For example, a card issuer that offers to waive interest charges for six months would be prohibited from revoking the waiver and charging interest during the six-month period unless the account becomes more than 60 days delinquent. * Application and similar fees that a consumer is required to pay before a credit card account is opened are covered by the same limitations as fees charged during the first year after the account is opened. Because the total amount of these fees cannot exceed 25% of the account's initial credit limit, a card issuer that, for example, charges a $75 fee to apply for a credit card with a $400 credit limit generally would not be permitted to charge more than $25 in additional fees during the first year after account opening. * When evaluating a consumer's ability to make the required payments before opening a new credit card account or increasing the credit limit on an existing account, card issuers must consider information regarding the consumer's independent income, rather than his or her household income.
The Fed will be publishing its proposal (see resource link) in the Federal Register
, likely within the next week. Comments on the proposal must be submitted within 60 days after its publication. The Fed on Tuesday also made official an interim final rule that pushed back the compliance date for gift card-related disclosure rules until Jan. 31, 2011. Those rules were previously slated to come into effect on Aug. 22. For that Fed release, use the resource link.