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#604111 - 08/23/06 09:26 PM Credit card rate increases
straw Offline
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straw
Joined: Nov 2002
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We are looking at going from 3 to 5 pricing strategies, with some cardholders getting a rate increase.

We are preparing change in term notices for those getting rate increases.

Since we are basing the pricing strategy changes on credit score, I believe we would also need to send adverse action notices to those getting a rate increase.

Is this correct?

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#604112 - 08/23/06 11:47 PM Re: Credit card rate increases
rlcarey Offline
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Galveston, TX
Yes, you are making an unfavorable change in the terms of an account that does not affect all or substantially all of a class accounts based on a credit bureau report and that meets the definition of adverse action under both Reg B and the FCRA, so you owe them both notices.
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#604113 - 08/24/06 04:42 PM Re: Credit card rate increases
straw Offline
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straw
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That's what I thought. Thanks.

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#604114 - 09/19/06 03:20 PM Re: Credit card rate increases
straw Offline
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straw
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I know the answer to this, but wanted to solicit feedback, as I will be meeting with senior management later today.

Does the analysis change if we make the rate increases effective against new balances only? Current balances will stay at current rates and we will establish separate buckets for new purchases or cash advances at higher rates, which will determined by credit score.

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#604115 - 09/19/06 05:46 PM Re: Credit card rate increases
straw Offline
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straw
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anyone? meeting with Management in 15 minutes and I was just hoping to have another opinion or two to cite.

Thanks.

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#604116 - 09/19/06 05:56 PM Re: Credit card rate increases
Dan Persfull Offline
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Bloomington, IN
IMO you are still taking adverse action as Randy noted.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#604117 - 09/19/06 05:57 PM Re: Credit card rate increases
straw Offline
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straw
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I agree Dan, and thanks for the post.

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#604118 - 09/19/06 06:37 PM Re: Credit card rate increases
straw Offline
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straw
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What about 202.2
(2) The term does not include: (i) A change in the terms of an account expressly agreed to by an applicant.

If we offer the cardholder to keep their current terms and close the card, or accept the new pricing and keep the card, would that qualify as change in terms expressly agreed to?

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#604119 - 09/19/06 08:24 PM Re: Credit card rate increases
straw Offline
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straw
Joined: Nov 2002
Posts: 9,121
Found it. Commentary states that express agreement does not include this.

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