Friday, January 15, 2010

Information on the Credit CARD Act

This information can be found at the Consumer Law & Policy Blog

The Fed has announced new amendments to Regulation Z to implement the provisions of the Credit CARD Act that go into effect next month. The Fed is still working on amendments to implement the Credit CARD Act measures that take effect in August. Here's an excerpt from the Fed's press release summarizing the effect of the new amendments

Among other things, the rule will:

Protect consumers from unexpected increases in credit card interest rates by generally prohibiting increases in a rate during the first year after an account is opened and increases in a rate that applies to an existing credit card balance.

Prohibit creditors from issuing a credit card to a consumer who is younger than the age of 21 unless the consumer has the ability to make the required payments or obtains the signature of a parent or other cosigner with the ability to do so.

Require creditors to obtain a consumer's consent before charging fees for transactions that exceed the credit limit.

Limit the high fees associated with subprime credit cards.

Ban creditors from using the "two-cycle" billing method to impose interest charges.

Prohibit creditors from allocating payments in ways that maximize interest charges.

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