Trades Express Concern on CARD Act
CUNA and NAFCU are concerned about the CARD Act's proposed fee structure and the requirement to reevaluate a card user's interest rates every six months.
Those are the key points the trade associations expressed in separate letters to the Federal Reserve. The rules, which will implement the law passed last year to overhaul credit card laws, would take effect on Aug. 22.
CUNA and NAFCU take issue with the proposed ban on levying multiple penalty fees on an individual transaction. Under the proposal, a credit union could only charge one fee per transaction. For example, it could charge a late fee or a returned payment fee but not both.
NAFCU Associate Director of Regulatory Affairs Dillon Shea wrote that the rules are "unnecessarily complex." He suggested that credit unions should be able to charge multiple fees in some instances, such as when a consumer has sufficient advanced knowledge that a check has been returned and still doesn't make a timely payment.
Shea also expressed support for the parts of the proposal to allow tiered penalties for cardholders who recently violated terms of an agreement.
The trade associations also said a requirement that a card issuer review an increase in the APR at least every six months should end two years after the initial rate increase.
CUNA Assistant General Counsel Jeffrey Bloch wrote that "if a member does not qualify for a rate decrease after two years, then it is much less likely that the member's behavior will change for the better after that period of time."
He also said that the proposal to require credit unions to implement any rate reduction resulting from a six-month review within 30 days would be burdensome and should be extended to 45 days.
To read the proposed regulations, go to: edocket.access.gpo.gov/2010/2010-4859.htm.