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August 28th, 2009

Update1 OCC Issues ‘Additional Guidance’ On Portions of Credit Card Reform Already In Effect

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(Update1): The Office of the Comptroller of the Currency (OCC) issued a bulletin on Wednesday regarding the specific provisions of the credit card reform that have already taken affect. The bulletin pertains specifically to the 45-days notice the card companies must provide cardholders when or if their interest rate will be changed (emphasis added):

The bulletin describes an interim final rule issued by the Federal Reserve Board that requires banks to notify customers 45 days in advance of any rate increase or significant changes in credit card account terms. The rules also require lenders to disclose that their customers have the right to reject those changes.

However, under the rules, the new rates or terms can be applied to any transaction that occurs more than 14 days after the notice is provided – even if the customer ultimately rejects the changes. The rules do not require creditors to tell their customers that new terms can be applied during the 45-day period.

The OCC claims that they are directing banks to notify their customers of this “consequence” to prevent confusion…we’ll see about that.

(Original post published on 8/24/09) Portions of the new credit card reform went into effect on Friday August 21. From here on out, credit card companies are required to mail out statements three weeks before they are due, up from two weeks. Also, card companies must now provide 45 days’ notice prior to changing your interest rate.

Under the provision of the 45 days’ notice, customers can decide whether to accept or decline the new rate. Cardholders have the option to cancel the card and pay off the balance at the current rate.

-click here to see a sample credit-card cancellation letter-

“It’s going to put everything above board,” said White House Economist Austan Goolsbee. When you read your credit card application, says Goolsbee, “there’s going to be simple and clear disclosure of what the terms are.”

The rest of the new rules won’t take effect until February.

Unintended Consequences

Although the credit card reform was designed to guard consumers against “unfair” practices, many critics have discovered several unintended consequences that could wind up working against your favor. Be sure you know the “Ways to Combat New Credit Card Rules.”

For more on the subject, be sure to read:
Credit Card Co’s Set Sights On Responsible Customers
New credit card rules are now law

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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