Card To Card Transfers

New rules add consumer protection for balance transfer offers

The Federal Reserve Board recently approved new rules that look to further consumer protection afforded by the Credit Card Accountability Responsibility and Disclosure Act of 2009 ( CARD Act ).

The amendments approved by the Federal Reserve should help protect consumers by closing loopholes and adding clarity to gray areas. The new rules focus on three particular elements that regulators felt needed further clarification.

Under the CARD Act, if an issuer offers a credit card with a zero percent introductory rate for a specified period of time – 12 months, for example – the issuer cannot raise the promotional 0 percent rate in the 12-month period unless the cardholder is more than 60 days delinquent.

The new rules focus on a loophole in the way a promotional offer can be structured. The amendment states that the same rules apply regardless of whether a promotional interest rate is structured as a “reduced rate” or as “waived interest charges.” In either case, the stated promotional rate cannot be increased unless the account is delinquent by more than 60 days.

With the new rules in place, a consumer who, for example, gets approved for a zero interest balance transfer credit card can feel confident that the zero percent promotional rate will stay intact as long as the account is not delinquent by more than 60 days. If that consumer, for example, is late on a payment by one day, the promotional rate cannot be revoked.

The same protections will apply to introductory credit card offers that give new cardholders zero interest on purchases for a specified period of time.

Under the CARD Act, total first-year fees for a specific credit card cannot exceed 25 percent of the credit limit for the account. A loophole allowed issuers to charge fees before an applicant became a cardholder, so that these initial fees would not be included in the 25 percent calculation.

Now, all fees – including application fees and other fees incurred before the consumer is approved – are covered by the same limitations. If a credit card has a $500 limit, for example, total fees cannot exceed $125. If the cardholder paid $75 to apply for the card, the issuer cannot charge more than $50 in fees the remainder of the year.

How issuers approve new cardholders is also under scrutiny. Under the new amendments, issuers should not request an applicant’s “household income” because, according to the Fed, the term is “too vague to allow issuers to properly evaluate the consumer’s ability to pay.” Issuers should instead consider the applicant’s individual income or salary when making a credit decision.

Best Credit Card Offers Revealed by the First National Bank of ...

A joint effort from Discover Network and the First National Bank of Omaha is the new Discover Credit Card. The First National Bank of Omaha is now issuing Discover cards after an agreement was signed last August 2010. The bank is currently allowed to issue best credit card offers on the four major card networks. It is included on the ones being retained with three of them currently remaining to have a contract with the four companies.

Stephen Eulie, President, First Bankcard, the credit card division of First National Bank of Omaha said that greater possibility and opportunity is offered by the best credit card offers especially giving consideration to the co-brand, credit union, and agent bank space. There will also be increased value and options on the ends of the consumers.

The new Discover card has a 0% interest rate for the first 6 months partnered by 12-month balance transfers. It also includes a feature on cash back where in based on purchases, 5% of which will be given back to the customers.

The president is also pleased to inform the benefits of the single card that will certainly be a benefit for cardholders. Through partnerships they have, they are even enhancing the value they provide to their customers through the best credit card offers.