View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Advanced

Search
About
the Fed

News
& Events

Monetary
Policy

Supervision
& Regulation

Payment
Systems

Economic
Research

Data

Consumers
& Communities

Board of Governors of the Federal Reserve System
The Federal Reserve, the central bank of the United States, provides the nation with a
safe, flexible, and stable monetary and financial system.

Home > News & Events > Press Releases

Press Release
March 18, 2011

Federal Reserve issues clarifications to
Regulation Z provisions that apply to open-end
credit plans, including credit cards
For immediate release
Share

The Federal Reserve Board on Friday approved a rule amending
Regulation Z (Truth in Lending) to clarify aspects of prior Board rules
implementing the Credit Card Accountability Responsibility and
Disclosure Act of 2009 (Credit Card Act). This rule is intended to
enhance protections for consumers who use credit cards and to resolve
areas of uncertainty so that card issuers fully understand their
compliance obligations.
In order to protect consumers from incurring unaffordable levels of credit
card debt, the Credit Card Act requires that, before opening a new credit
card account or increasing the credit limit on an existing account, card
issuers consider a consumer's ability to make the required payments on
the account. Consistent with the act, the Board's rule addresses
practices that can result in extensions of credit to consumers who lack
the ability to pay. Specifically, the rule states that credit card applications
generally cannot request a consumer's "household income" because
that term is too vague to allow issuers to properly evaluate the
consumer's ability to pay. Instead, issuers must consider the consumer's
individual income or salary.
In addition, the Board's rule clarifies that:
Promotional programs that waive interest charges for a specified

period of time are subject to the same Credit Card Act protections
as promotional programs that apply a reduced rate for a specified
period. For example, a card issuer that offers to waive interest
charges for six months will be prohibited from revoking the waiver
and charging interest during the six-month period, unless the
account becomes more than 60 days delinquent.
Application and similar fees that a consumer is required to pay
before a credit card account is opened are covered by the same
Credit Card Act 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.
The notice that will be published in the Federal Register is attached.
Federal Register notice: HTML | PDF (526 KB)

Last Update: March 18, 2011

BOARD OF GOVERNORS
of the FEDERAL
RESERVE SYSTEM
About the Fed
News & Events
Monetary Policy
Supervision & Regulation
Payment Systems
Economic Research
Data
Consumers & Communities

TOOLS AND
INFORMATION

STAY CONNECTED

Contact
Publications
Freedom of Information (FOIA)
Office of Inspector General
Budget & Performance | Audit
No FEAR Act
EspaƱol
Website Policies | Privacy
Program
Accessibility

BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM
20th Street and Constitution Avenue N.W., Washington, DC 20551