Financial Update (Second Quarter 2009)

Fed Proposes Clarifications to Rules About Credit Card Accounts

fine print graphicThe Federal Reserve, the Office of Thrift Supervision, and the National Credit Union Administration have proposed clarifications to aspects of the final rules enacted in December 2008. The clarifications would prohibit certain credit card practices and alter a rule under the Truth in Lending Act, amending Regulation Z, to improve the disclosures consumers receive in connection with credit card accounts and other revolving credit card plans.

Proposals emphasize interest rate consistency, clarity
The proposals would clarify that
  • the key protections in the final rules would continue to apply to balances on a consumer's credit card account when the account is closed or acquired by a different institution or when the balances are transferred to another account issued by the same institution. For example, an institution could not increase the interest rate on a credit card balance because the account has been closed; and
    Related
    Press release off-site image
    Sample credit card statement form off-site image
    Federal Reserve Board's proposals for comment off-site image


  • institutions and retailers may continue to offer deferred interest and similar programs, but these programs would be subject to all of the final rules' protections. For example, if a consumer makes a purchase under a deferred interest program, the terms governing interest charges on that purchase cannot be changed through a "universal default" rate increase. In addition, institutions and retailers must comply with enhanced disclosure requirements.

Comments on new proposals sought
The proposals are intended to ease compliance with the December 2008 final rules without reducing protections for consumers. The agencies issuing the proposals are seeking comments on them (see the related links to comment).

May 19, 2009