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Compliance CUs cant relax yet on CARD Act
WASHINGTON (4/8/10)--While much of the work related to the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act has been completed in the past year, the Credit Union National Association’s Mike McLain warned that credit unions should remain wary of changes the Federal Reserve has made to portions of its Regulation Z. Those changes affect the “format, timing, and content” for “credit and charge card applications and solicitations, account opening disclosures, periodic statement disclosures, change-in-terms disclosures, and advertising provisions,” McLain said. Addressing these changes, which come into effect on July 1, in this month’s edition of Credit Union Magazine, McLain provided further detail on some of the new rules. Portions of the Reg Z changes that affect account opening disclosures will require “a new summary table to be included in the account-opening disclosures for all open-end credit except for home equity lines of credit (HELOCs).” These tables must include data on annual percentage rates and many bits of information related to the terms of the account. Periodic statement disclosures must also be adjusted through changes to the way that interest and fees charged during the billing cycle are displayed. Financial institutions must also show fees and interest totals for the month and year to date on these disclosures, but a previous requirement to “calculate and disclose the effective APR has been eliminated,” McLain added. CUNA has addressed a number of other CARD Act-related questions in a recently published list of Frequently Asked Questions (FAQ).These include questions related to floor rates, change-in-terms notices, increases in variable rates, limitations on increasing annual percentage rates and fees, changes in credit terms, renewal or annual fees, business credit accounts, and expedited payments. The FAQ also addresses portions of the CARD Act that prohibit rate increases in the first year that a credit card account is active, require co-signors 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. CUNA has submitted some of these questions to the Fed for its interpretation. “Even after credit unions implement all of these changes, they’ll have to deal with several additional CARD Act provisions” that become effective on Aug. 22, McLain said, adding that the Fed should soon issue additional final rules on HELOCs and closed-end mortgage loans. For the Credit Union Magazine story and CUNA’s FAQ, use the resource links.


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