(a) General rule. Except as provided in paragraph (b) of this section,
a card issuer must not increase an annual percentage rate or a fee
or charge required to be disclosed under section 226.6(b)(2)(ii),
(b)(2)(iii), or (b)(2)(xii) on a credit card account under an open-end
(not home-secured) consumer credit plan.
(b) Exceptions. A card issuer may increase
an annual percentage rate or a fee or charge required to be disclosed
under section 226.6(b)(2)(ii), (b)(2)(iii), or (b)(2)(xii) pursuant
to an exception set forth in this paragraph even if that increase
would not be permitted under a different exception.
(1) Temporary
rate, fee, or charge exception. A card issuer may increase an
annual percentage rate or a fee or charge required to be disclosed
under section 226.6(b)(2)(ii), (b)(2)(iii), or (b)(2)(xii) upon the
expiration of a specified period of six months or longer, provided
that:
(i) Prior to the commencement of that
period, the card issuer disclosed in writing to the consumer, in a
clear and conspicuous manner, the length of the period and the annual
percentage rate, fee, or charge that would apply after expiration
of the period; and
(ii) Upon expiration of the specified period:
(A) The card issuer must not apply an annual percentage rate, fee,
or charge to transactions that occurred prior to the period that exceeds
the annual percentage rate, fee, or charge that applied to those transactions
prior to the period;
(B)
If the disclosures required by paragraph (b)(1)(i) of this section
are provided pursuant to section 226.9(c), the card issuer must not
apply an annual percentage rate, fee, or charge to transactions that
occurred within 14 days after provision of the notice that exceeds
the annual percentage rate, fee, or charge that applied to that category
of transactions prior to provision of the notice; and
(C) The card issuer must not
apply an annual percentage rate, fee, or charge to transactions that
occurred during the period that exceeds the increased annual percentage
rate, fee, or charge disclosed pursuant to paragraph (b)(1)(i) of
this section.
(2) Variable
rate exception. A card issuer may increase an annual percentage
rate when:
(i) The annual percentage rate varies
according to an index that is not under the card issuer’s control
and is available to the general public; and
(ii) The increase in the annual percentage
rate is due to an increase in the index.
(3) Advance notice
exception. A card issuer may increase an annual percentage rate
or a fee or charge required to be disclosed under section 226.6(b)(2)(ii),
(b)(2)(iii), or (b)(2)(xii) after complying with the applicable notice
requirements in section 226.9(b), (c), or (g), provided that:
(i) If a
card issuer discloses an increased annual percentage rate, fee, or
charge pursuant to section 226.9(b), the card issuer must not apply
that rate, fee, or charge to transactions that occurred prior to provision
of the notice;
(ii)
If a card issuer discloses an increased annual percentage rate, fee,
or charge pursuant to section 226.9(c) or (g), the card issuer must
not apply that rate, fee, or charge to transactions that occurred
prior to or within 14 days after provision of the notice; and
(iii) This exception does
not permit a card issuer to increase an annual percentage rate or
a fee or charge required to be disclosed under section 226.6(b)(2)(ii),
(iii), or (xii) during the first year after the account is opened,
while the account is closed, or while the card issuer does not permit
the consumer to use the account for new transactions. For purposes
of this paragraph, an account is considered open no earlier than the
date on which the account may first be used by the consumer to engage
in transactions.
(4) Delinquency exception. A card
issuer may increase an annual percentage rate or a fee or charge required
to be disclosed under section 226.6(b)(2)(ii), (b)(2)(iii), or (b)(2)(xii)
due to the card issuer not receiving the consumer’s required minimum
periodic payment within 60 days after the due date for that payment,
provided that:
(i)
The card issuer must disclose in a clear and conspicuous manner in
the notice of the increase pursuant to section 226.9(c) or (g):
(A) A statement of the reason for the increase; and
(B) That the increased annual percentage rate,
fee, or charge will cease to apply if the card issuer receives six
consecutive required minimum periodic payments on or before the payment
due date beginning with the first payment due following the effective
date of the increase; and
(ii) If the card issuer receives six
consecutive required minimum periodic payments on or before the payment
due date beginning with the first payment due following the effective
date of the increase, the card issuer must reduce any annual percentage
rate, fee, or charge increased pursuant to this exception to the annual
percentage rate, fee, or charge that applied prior to the increase
with respect to transactions that occurred prior to or within
14 days after provision of the section 226.9(c) or (g) notice.
(5) Workout and temporary hardship arrangement exception. A card issuer may increase an annual percentage rate or a fee or
charge required to be disclosed under section 226.6(b)(2)(ii), (b)(2)(iii),
or (b)(2)(xii) due to the consumer’s completion of a workout or temporary
hardship arrangement or the consumer’s failure to comply with the
terms of such an arrangement, provided that:
(i) Prior
to commencement of the arrangement (except as provided in section
226.9(c)(2)(v)(D)), the card issuer has provided the consumer with
a clear and conspicuous written disclosure of the terms of the arrangement
(including any increases due to the completion or failure of the arrangement);
and
(ii) Upon the
completion or failure of the arrangement, the card issuer must not
apply to any transactions that occurred prior to commencement of the
arrangement an annual percentage rate, fee, or charge that exceeds
the annual percentage rate, fee, or charge that applied to those transactions
prior to commencement of the arrangement.
(6) Servicemembers Civil Relief Act exception. If an annual percentage
rate or a fee or charge required to be disclosed under section 226.6(b)(2)(ii),
(iii), or (xii) has been decreased pursuant to 50 U.S.C. app. 527
or a similar Federal or State statute or regulation, a card issuer
may increase that annual percentage rate, fee, or charge once 50 U.S.C.
app. 527 or the similar statute or regulation no longer applies, provided
that the card issuer must not apply to any transactions that occurred
prior to the decrease an annual percentage rate, fee, or charge that
exceeds the annual percentage rate, fee, or charge that applied to
those transactions prior to the decrease.
(c) Treatment of protected balances.
(1) Definition of protected balance. For purposes of this paragraph,
“protected balance” means the amount owed for a category of transactions
to which an increased annual percentage rate or an increased fee or
charge required to be disclosed under sections 226.6(b)(2)(ii), (b)(2)(iii),
or (b)(2)(xii) cannot be applied after the annual percentage rate,
fee, or charge for that category of transactions has been increased
pursuant to paragraph (b)(3) of this section.
(2) Repayment
of protected balance. The card issuer must not require repayment
of the protected balance using a method that is less beneficial to
the consumer than one of the following methods:
(i) The
method of repayment for the account before the effective date of the
increase;
(ii) An
amortization period of not less than five years, beginning no earlier
than the effective date of the increase; or
(iii) A required minimum periodic payment
that includes a percentage of the balance that is equal to no more
than twice the percentage required before the effective date of the
increase.
(d) Continuing application. This section continues
to apply to a balance on a credit card account under an open-end (not
home-secured) consumer credit plan after:
(1) The account is closed or acquired by
another creditor; or
(2) The balance is transferred from a credit card account under an
open-end (not home-secured) consumer credit plan issued by a creditor
to another credit account issued by the same creditor or its affiliate
or subsidiary (unless the account to which the balance is transferred
is subject to Section 226.5b).
(e) Promotional waivers or rebates of interest,
fees, and other charges. If a card issuer promotes the waiver
or rebate of finance charges due to a periodic interest rate or fees
or charges required to be disclosed under section 226.6(b)(2)(ii),
(iii), or (xii) and applies the waiver or rebate to a credit card
account under an open-end (not home-secured) consumer credit plan,
any cessation of the waiver or rebate on that account constitutes
an increase in an annual percentage rate, fee, or charge for purposes
of this section.
