Regulatory Comment on Credit CARD Act Rule: Advanced Notice and Cancel Requirements

The Pew Safe Credit Cards Project submitted comments to the Federal Reserve Board regarding the Board's interim final rules under Regulation Z (Docket No. R-1364). The rules cover advance notice and right to cancel requirements under the Credit CARD Act of 2009. Pew's comments focused on a number of exceptions the Board proposed, which could allow issuers to raise interest rates, change minimum required payment levels and impose potentially large deferred interest charges with little or no advance warning.

Specifically, Pew's comments presented the following key points:

1. Exceptions to § 226.9 notice requirements for fluctuations in variable interest rates should not apply to any account for which the issuer requires a fixed minimum interest rate to apply.
2. There is no basis in the Act for the proposed exception to the right to reject changes in terms for increases in minimum required payments, and it should be deleted.
3. The proposed exception to the requirement to notify cardholders of their right to cancel and avoid interest rate increases or other significant changes in cases where accounts are 60 days past due is unwarranted, and overbroad.
4. Issuers should be required to provide notice to cardholders within 45 days of the expiration of deferred interest periods.

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