Federal Reserve Board approves interim final rule

The Federal Reserve Board has approved an interim final rule amending the Truth in Lending Act (TILA) to require creditors to increase the amount of notice consumers receive before the rate on a credit card account is increased or a significant change is made to the account's terms. Besides, the Credit Card Act`s amendments to TILA allow consumers to reject such increases and changes by informing the creditor before the increase or change becomes effective.

The interim final rule implements the following requirements in the Credit Card Act:

• Creditors must provide written notice to consumers 45 days before the creditor increases an annual percentage rate on a credit card account or makes a significant change to the terms of a credit card account;
• Creditors must inform consumers in the same notice of their right to cancel the credit card account before the increase or change takes effect. If a consumer does so, the creditor is generally prohibited from applying the increase or change to the account;
• Creditors generally must mail or deliver periodic statements for credit cards and other open-end consumer credit accounts at least 21 days before payment is due.

In addition, comments on the interim final rule must be submitted within 60 days after publication in the Federal Register, which is expected shortly.