WASHINGTON (2/2/10)—A comprehensive breakdown of the Federal Reserve Board’s recently published final rules that restrict a number of credit card practices has been posted to the Credit Union National Association’s (CUNA’s) website. The CUNA analysis involves the second set of Fed rules to implement the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act). They become effective Feb. 22. CUNA is offering an audio conference call today on the provisions covered in the Fed’s new rule. The conference call, scheduled for 1-2:30 p.m. (CT), will feature Benjamin Olson and Amy Henderson, senior attorneys in the Fed’s division of consumer and community affairs, Mary-Lou Heighes, a Credit Union Compliance Expert (CUCE) and president of Compliance Plus, Inc., Jeff Bloch. senior assistant general counsel for CUNA, and Mike McLain, assistant general counsel and senior compliance counsel for CUNA. The rules include:
* Restrictions on some changes in interest rates; * A requirement for minimum payment warnings on credit card statements; * A requirement for a co-signers for consumers under the age of 21 opening a card account; and * A requirement that payments above the minimum amount be applied to balances with the highest interest rate, in addition to a number of other requirements.
The CUNA analysis points out that the Fed made a significant change to its proposed rule before making them final. In the official staff commentary there is a new restriction for credit unions that use variable rates with a fixed minimum rate, or “floor.” Attached to the end of the CUNA Final Rule Analysis is a separate memorandum that outlines guidance from the Fed on this issue. The rule also finalizes the earlier interim final rule that implements the CARD Act provisions that were effective as of Aug. 20, 2009. This includes the requirement to send periodic statements at least 21 days before the payment is due and the requirement to provide a 45-day notice when the rate and certain terms of a credit card account are changed. Most of the CARD Act provisions apply only to credit cards. However, it notes, early last year the Fed issued comprehensive rules to amend the Regulation Z open-end credit rules, which encompass credit card, as well as other open-end plans, and a number of those are also addressed in the CARD Act. Provisions of earlier Regulation Z rules that are not addressed in the CARD Act will remain in effect. The provisions of these rules that are inconsistent with the CARD Act provisions have been amended or withdrawn to ensure consistency. The applicable provisions of the unfair and deceptive acts and practices (UDAP) rules that were issued by the National Credit Union Administration (NCUA) early last year have been withdrawn, since they address similar issues. Use the resource links below to read CUNA complete analysis of the new CARD Act rules and for more CARD Act conference call information.