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Fed issues final CARD Act rules
WASHINGTON (1/13/10)--The Federal Reserve Board on Tuesday approved amendments to Regulation Z, Truth in Lending, which implement provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009. The rules go into effect Feb. 22. The CARD Act legislated sweeping credit card industry reforms aimed at protecting consumers. Known by the partial acronym the "Credit CARD Act," the new law is intended to prevent lenders from such things as making arbitrary changes to the interest rates and terms associated with a card that holds an existing balance. Specifically, the new law and implementing regs prohibit rate increases in the first year that a credit card account is active, require cosignors for credit card accounts taken out by an individual under 21 years of age, require that creditors obtain the consent of the cardholder before charging over the limit fees, and limit many of the fees associated with so-called “subprime” credit cards. In a release, Fed Governor Elizabeth Duke said that the rule, which “bans several harmful practices and requires greater transparency in the disclosure of the terms and conditions of credit card accounts,” marks “an important milestone in the Federal Reserve's efforts to ensure that consumers who rely on credit cards are treated fairly.” Other portions of the CARD Act will be implemented by the Fed in the near future and will become effective on Aug. 22. Additionally, the rule incorporates the Regulation Z open-end final rules that were issued in Jan. 2009. These rules also finalize the interim final rules that were issued in July and that were effective this past Aug. 20. The Fed has also withdrawn its unfair and deceptive acts and practices rule. While the National Credit Union Administration, which was party to those rules, has not yet publicly withdrawn them, the Credit Union National Association (CUNA) anticipates that the NCUA will withdraw them soon. CUNA will be reviewing this rule closely to also determine the extent that they may impact 2009’s open-end Reg Z rules, including the upcoming July 1 compliance date for those rules. CUNA will also hold an audio call on the new rules in the coming weeks.
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