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Fed releases final Reg Z changes
WASHINGTON (6/16/10)--The Federal Reserve Board has begun implementation of the third stage of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 by officially approving a final rule that will protect card users from “unreasonable late payment and other penalty fees.” The rule also requires lenders to “reevaluate recent interest rate increases and, if appropriate, reduce the rate," Fed Governor Elizabeth Duke said in a release. Specifically, the final rule amends Regulation Z (Truth in Lending) by preventing lenders from charging late fees that are over $25 or penalty fees that “exceed the dollar amount associated with the consumer's violation.” The changes also prevent lenders from charging so-called "inactivity" fees on accounts. These rules will come into effect on August 22. Portions of the CARD Act that 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 were approved by the Fed earlier this year. For the Fed release and the Fed’s guide on the new credit card rules, use the resource links.
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