OCC Issues Additional Guidance on Credit Card Account Rate Increases

WASHINGTON — The Office of the Comptroller of the Currency (OCC) issued a bulletin today on provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act). 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.

Until the issue is clarified in Federal Reserve rulemaking, the OCC is directing national banks to include an additional disclosure to notify consumers of this consequence. The OCC believes that this additional disclosure will prevent consumer confusion, particularly for customers who opt to reject the changes in terms.

Today's bulletin is the second guidance that the OCC has issued about the Credit CARD Act. On July 30, the OCC issued Bulletin 2009-25 to remind national banks that effective August 22, 2010, they must conduct periodic reviews of accounts whose interest rates have been increased since January 1, 2009, based on factors including market conditions and borrower credit risk. If such factors have changed, the Credit CARD Act requires that the rates on the accounts must be reduced. The OCC required national banks to maintain and have available information concerning any rate increases as needed to conduct the required periodic reviews.