08.20.09
By John Ulzheimer
As of today, August 20, 2009, credit card issuers will be required to start giving at least a 45-day notice about interest rate increases on consumer credit accounts. There is substantial confusion regarding when credit card issuers are required to give you the newly requisite 45-day notice. And there is confusion regarding the justification of when a notice is required at all. I address the most common myths and clarify:
1. Interest Rate Changes – This is clear. The 45-day notice must preface any change in your interest rate. Whether or not you’ll actually read it... well, that’s another issue entirely.
2. Changes to Your Credit Limits – There is no requirement to notify the cardholder that their credit limit has been changed. You’ll likely find out by reviewing your statement, your
credit report, or your transaction will be denied at the register if your purchase puts you over your newly lowered credit limit. The logic is that notifying a cardholder of a credit limit decrease in advance could lead to that cardholder maxing out their card in advance.
3. Account Closures – As hard as this is to believe, there is no requirement to notify the cardholder that their card will be closed.
4. Changes Made Pursuant to Credit Report or Credit Score Review – The
CARD Act provisions do not give credit card issuers an exception to the requirements of section 615 of the
Fair Credit Reporting Act. The Act clearly states, and continues to state, “If any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report, the person shall provide oral, written, or electronic notice of the adverse action to the consumer.” What this means is consumers will continue to get notices from their credit card issuers if their credit reports were material to any adverse changes to your account. However, the notice will come after their decision has been made.
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