Regulators: Consumer Credit Changes to Take EffectFederal banking regulators issued notification to financial institutions on Friday that will affect open-end credit plans, including consumer credit cards.
Earlier this summer the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) amended the Truth in Lending Act (TILA) to establish fair and transparent practices. The Federal Reserve Board's interim final regulations put in place provisions of the Credit CARD Act that will take effect on August 20. The FDIC also issued a letter to its financial institutions and says it expects the institutions it supervises to take appropriate steps to ensure compliance with these new requirements.
There are parts of the Credit CARD Act (PDF) that will be effective on February 22, 2010, and the FRB will issue additional implementing regulations on those parts of the act. The FDIC says it will enforce compliance with these and other provisions of the law, and will address practices that are or may be unfair or deceptive in violation of Section 5 of the Federal Trade Commission Act.
These are the provisions that will take effect immediately (Aug. 20) and will affect open-end credit plans, including credit cards:
- Applicable to all open-end consumer credit accounts, including credit cards and home equity lines of credit accessed by a credit card, creditors must mail or deliver periodic statements at least 21 days before the payment is due.
- Applicable to credit card accounts, creditors must give 45-days notice of increases in the Annual Percentage Rate (APR) or other significant changes in terms, including a notice of the right to cancel the account.
- All increases in the APR of a credit card account after January 1, 2009, must be reviewed beginning in August 2010 for a possible reduction in the APR based on the same factors used to justify the increase.