The New "Independent Ability to Pay" Requirement for Open-End Credit Under the Federal Reserve Board's Reg Z

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The March 18, 2011 Regulation Z amendments adopted by the Federal Reserve Board clarify aspects of the open-end credit card rules adopted to implement changes to the Truth in Lending Act, under the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (the so-called CARD Act). New Section 226.51(a) provided that a card issuer must not open a credit card account or increase the credit limit on an existing account without considering the ability of the consumer to make the required minimum paymnets based on the consumer's income or assets and the consumer's current obligations. This article explains how credit card issuers grapple with the Reg Z requirements and the Fed's responses to their concerns.

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