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Qualified, experienced BKD client service professionals write the contents of these articles. We urge you to carefully consider all of the facts and circumstances of your situation before applying specific information in our articles. Consult your BKD advisor before acting on any matter covered in these articles.
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August 2009 Interim final rule makes changes to Regulation Z
 Sean Kulczycki The Federal Reserve recently issued an interim final rule making changes to Regulation Z that become effective August 20, 2009. The changes will affect financial institutions that offer home equity lines of credit (HELOCs), credit cards or any other open-end consumer credit product. The interim final rule was triggered by the Credit Card Act, which was signed into law May 22, 2009. The act requires certain provisions become effective 90 days after enactment. This is the primary reason for the short notice provided by the Federal Reserve. For all open-end credit products requiring a periodic statement (including HELOCs, overdraft protection lines of credit and credit cards), creditors must now “adopt reasonable procedures designed to ensure periodic statements are mailed or delivered at least 21 days prior to the payment due date and the date on which any grace period expires.” As indicated in the commentary to the interim final rule, the payment due date is the “due date according to the legal obligation between the parties....” If a courtesy period is provided prior to a late fee being charged, this period should not be factored in to the timing requirements. The grace period is defined as a “period within which any credit extended may be repaid without incurring a finance charge due to a periodic interest rate.” As a result, this provision of the timing rule will typically only apply to credit cards. As of August 20, 2009, if your financial institution has not adopted “reasonable procedures” to meet the amended timing requirements, you may not treat a payment as late for any purpose or collect any finance or other charge imposed as a result of such failure. While the changes apply to all open-end line of credit products, additional changes for credit card issuers also will go into effect August 20, 2009. These changes generally require that consumers receive 45 days’ advance notice of interest rate increases and significant changes in terms. However, there is much complexity within these revisions and we recommend financial institutions conduct a thorough review of the interim final rule. For more information on this issue or related matters, please contact your BKD advisor. 
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