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Board of Governors of the Federal Reserve System
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Press Release
December 18, 2008

Federal Reserve approves rules that will better
protect credit card users
For immediate release
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The Federal Reserve Board on Thursday approved final rules that would
better protect credit card users by prohibiting certain unfair acts or
practices and improving the disclosures consumers receive in
connection with credit card accounts and other revolving credit plans.
The final rules prohibiting certain credit card practices were adopted
under the Federal Trade Commission Act, and are being issued
concurrently with substantially similar final rules by the Office of Thrift
Supervision and the National Credit Union Administration. Among other
things, the rules will:
Protect consumers from unexpected interest charges, including
increases in the rate during the first year after account opening
and increases in the rate charged on pre-existing credit card
balances.
Forbid banks from imposing interest charges using the "two-cycle"
billing method.
Require that consumers receive a reasonable amount of time to
make their credit card payments.
Prohibit the use of payment allocation methods that unfairly
maximize interest charges.
Address subprime credit cards by limiting the fees that reduce the
amount of available credit.

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In finalizing the rules on unfair credit card practices, the Board carefully
considered information obtained through consumer testing and more
than 60,000 comment letters received during the comment period.
"The revised rules represent the most comprehensive and sweeping
reforms ever adopted by the Board for credit card accounts," said
Federal Reserve Chairman Ben S. Bernanke. "These protections will
allow consumers to access credit on terms that are fair and more easily
understood."
The Board is also adopting final rules to revise the disclosures
consumers receive in connection with credit card accounts and other
revolving credit plans to ensure that information is provided in a timely
manner and in a form that is readily understandable. These rules
amend Regulation Z (Truth in Lending) and conclude a comprehensive
review of the open-end credit rules. The final rules under Regulation Z
require changes to the format, timing, and content requirements for
credit card applications and solicitations and for the disclosures that
consumers receive throughout the life of an open-end account. Many of
the changes reflect the result of consumer testing conducted on behalf
of the Board during its review.
"Our intent is to increase transparency and fairness in how credit card
and deposit accounts operate, thereby enhancing competition and
empowering consumers to better manage their accounts and avoid
unnecessary costs," said Federal Reserve Governor Randall S.
Kroszner. "The rules represent a significant step forward in consumer
protection. By ensuring fairness and making credit terms easier to
understand, these safeguards should allow more consumers to benefit
from using credit."
Both of the final rules addressing credit card accounts take effect on July
1, 2010.
The Board is separately proposing rules to protect consumers that use
overdraft services offered by their bank. The rule solicits public
comment on proposed amendments to Regulation E (Electronic Fund
Transfers) intended to provide consumers a choice regarding their
institution's payment of overdrafts for automated teller machine
withdrawals and one-time debit card transactions. The Board is
proposing two alternative approaches to providing consumer choice,
including a proposed requirement that would require institutions to
obtain consumers' affirmative consent (or opt-in) before any overdraft
fees or charges may be imposed on consumers' accounts. The
comment period for the Regulation E proposal ends 60 days after
publication in the Federal Register.
In a related move, the Board is adopting final amendments to Regulation
DD (Truth in Savings) to address depository institutions' disclosure
practices related to overdraft services. The effective date for the final
rules adopted under Regulation DD is January 1, 2010.
All four Federal Register notices are attached. Publication of each of the
rules is expected shortly.

Highlights of Rules Regarding Credit Card Accounts and Overdraft
Services (30 KB PDF)
Statement by Chairman Ben S. Bernanke
Statement by Governor Randall S. Kroszner
Federal Register notice, Regulation AA: 466 KB PDF | HTML
Federal Register notice, Regulation DD: 93 KB PDF | HTML
B-10 (69 KB PDF) Aggregate fee model
Federal Register notice, Regulation E: 499 KB PDF | HTML
Model forms and samples:
1. A-9 (28 KB PDF) Model consent form for overdraft services
2. A-9 (A) (28 KB PDF) Model opt-out form for account opening
3. A-9 (B) (11 KB PDF) Model opt-out form for periodic statements
Review and Testing of Overdraft Notices (10.2 MB PDF)
Federal Register notice, Regulation Z: 3.36 MB PDF | HTML
Model forms and samples:
1. G-10 (A) (77 KB PDF) Applications and solicitations model form
(credit cards)
2. G-10 (B) (72 KB PDF) Applications and solicitations sample
(credit cards)
3. G-10 (C) (59 KB PDF) Applications and solicitations sample
(credit cards)
4. G-10 (D) (28 KB PDF) Applications and solicitations model form
(charge cards)
5. G-10 (E) (22 KB PDF) Applications and solicitations sample
(charge cards)
6. G-17 (A) (58 KB PDF) Account-opening model form
7. G-17 (B) (62 KB PDF) Account-opening sample
8. G-17 (C) (64 KB PDF) Account-opening sample
9. G-17 (D) (48 KB PDF) Account-opening sample (line of credit)
10. G-18 (A) (460 KB PDF) Periodic statement transactions: interest
charges; fees sample
11. G-18 (D-E) (27 KB PDF) Periodic statement new balance, due
date, late payment, and minimum payment sample (credit cards)
and periodic statement new balance, due date, and late payment
sample (open-end plans (non-credit-card accounts))
12. G-18 (F) (162 KB PDF) Periodic statement form
13. G-18 (G) (926 KB PDF) Periodic statement form
14. G-19 (14 KB PDF) Checks accessing a credit card sample
15. G-20 (23 KB PDF) Change-in-terms sample
16. G-21 (50 KB PDF) Penalty rate increase sample
Design and Testing of Effective Truth in Lending Disclosures: Findings
from Qualitative Consumer Research (15.1 MB PDF)
Design and Testing of Effective Truth in Lending Disclosures: Findings
from Experimental Study (13.2 MB PDF)

Last Update: January 29, 2009

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