Thread Options
#2255024 - 06/08/21 07:17 PM Floors on Credit Cards & Protected Balances
ItsJustMe Offline
Gold Star
Joined: Dec 2009
Posts: 280
New York
I tried searching for an answer here but couldn't quite get what I was looking for. We still have one credit card product where the rate has a floor. When we increase the rate/margin, we send a notice 45 days in advance as required. What I can't get my fingers on is, once we apply the increased APR are the prior balances protected? 1026.55(c) doesn't talk about this type of situation. Feedback is greatly appreciated!!

Return to Top
Lending Compliance
#2255027 - 06/08/21 08:14 PM Re: Floors on Credit Cards & Protected Balances ItsJustMe
ItsJustMe Offline
Gold Star
Joined: Dec 2009
Posts: 280
New York
Bump

Return to Top
#2255038 - 06/09/21 01:52 AM Re: Floors on Credit Cards & Protected Balances ItsJustMe
rainman Offline
Power Poster
rainman
Joined: Nov 2004
Posts: 3,012
Yes they are protected. The variable rate exception only applies if the index is not under the creditor's control. Official Staff Comment 2.ii. to Section 1026.55(b)(2) indicates that if there is a floor rate, the index is treated as being under the creditor's control. Thus the variable rate exception is not applicable. The advance notice exception (1026.55(b)(3)) requires that you protect the existing balances.
_________________________
Nobody's perfect, not even a perfect stranger.

Return to Top
#2255042 - 06/09/21 12:49 PM Re: Floors on Credit Cards & Protected Balances ItsJustMe
ItsJustMe Offline
Gold Star
Joined: Dec 2009
Posts: 280
New York
rainman, thank you so much! And thank you for the citation....completely missed that.... I'll take a look.

Return to Top

Moderator:  Andy_Z