Federal Reserve Approves Rule Clarifying CARD Act

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Although the Credit Card Accountability, Responsibility and Disclosure Act has been around since 2009, Uncle Sam is still refining the rules. Here are some recent changes that might affect you.

This post comes from partner site LowCards.com.

Last week, the Federal Reserve Board approved a rule designed to provide additional protections for credit card consumers. The Board’s rule amends Regulation Z (Truth in Lending) to clarify prior rules implementing the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act).

The Board’s rule has the following impact on cardholders and issuers:

  • The CARD Act requires issuers to consider a consumer’s ability to make payments before opening a new credit card account or increasing the credit limit on an existing account. Issuers must consider the consumer’s individual income or salary. The application can no longer request “household income” because that term is too vague.
  • Promotional programs, like introductory rates that waive interest charges for a specified period of time, must follow the same rules as promotional programs that apply a reduced rate for a specified period. Offers that waive interest charges during an intro period cannot revoke the waiver and charge interest during the intro period, unless the account becomes more than 60 days delinquent.
  • Application and similar fees that are charged before a credit card account is opened have 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 percent 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 will not be permitted to charge more than $25 in additional fees during the first year after account opening,” says the Federal Reserve statement.

You can read the Federal Reserve press release here.

Stacy Johnson

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