As a result of our current economic crisis which began in 2008, congress has approved far reaching regulatory change for financial institutions. As a credit union, we have reviewed and put into practice these changes, but because we think they are far reaching, an important question to ask is "What do all these changes mean to individual consumers?" Let's look at just the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 and amendments to Regulation Z.
The regulators have made some serious changes for the credit card industry and the loan industry over a one + year period. They say all changes are to be geared to help the consumer better understand their periodic statement and receive disclosure of pending changes. If you have a credit card or an open end consumer loan, you have probably have noticed these changes to your statements or received the new disclosures for these changes.
Here are a few of the changes you will see on your statements:
- Your loan payment due dates must be at least 21 days after the statement period date
- All finance charges must be spelled out on the statement
- Minimum payment warning amount must be disclosed, plus the length of time it will take to pay off the balance by paying the minimum payment
- The late payment fee or penalty fee amount cannot exceed the minimum payment amount
- Late charges, penalty fees, return check fees and over the limit fees must be reasonable
- You cannot be charged an inactivity fee
- Interest rates need to be referred to as a non-variable rate, not a fixed rate
- Multiple fees cannot be charged on a single late payment.
Here are a few new rules and disclosure changes required:
- You must be given a notice of at least 45 days before a rate change is in effect
- You must receive an annual fee renewal reminder
- Consumers under the age of 21 cannot receive a pre-screened offer, they cannot be marketed to and do not qualify for a credit card unless they have a co-signer
- Credit card issuers must list 4 principal reasons for a rate increase and then allow a periodic review period before the rate changes.
If you haven't noticed these changes, please look at your next monthly periodic statement or review recently received disclosures.
Are these items more readily noticeable? Is your statement easier to understand? If they are, the regulatory changes have served their purpose, if not, it seems there will have to be more regulatory changes coming!!!!!
Mary Ann Fischer, Internal Auditor