BOARD ISSUES FINAL RULE CLARIFYING REGULATION Z CARD ACT RULES

The Federal Reserve Board (Board) has issued a final rule amending parts of Regulation Z and its official staff commentary to resolve uncertainty and facilitate compliance with rules implementing the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). See Alerts dated July 16, 2009, and January 12, March 4, March 9, June 15 and October 26, 2010.

The clarifications cover a wide range of topics, from definitions (Section 226.2) to reevaluation of rate increases (Section 226.59). For example, the rule clarifies how creditors should disclose limitations on rate decreases, duration of penalty rates, grace period limitations, fee waivers and balance computation method(s) in tabular application and solicitation and account-opening disclosures.

Most changes—even the controversial provision requiring consideration of an applicant’s independent ability to pay (and not spousal or household income)—were adopted largely as proposed.

The rule is effective and compliance is mandatory on October 1, 2011. However, creditors may, at their option, comply with the rule prior to that date.

Do not hesitate to contact us for more information on the final rule.

  • Judy Scheiderer