LIBOR CFPB FAQ CCs 10 – What if the credit card contract does not allow index replacement until LIBOR is unavailable?

Compliance > Regulation Z - TILA > LIBOR Transition
Q:  What if the credit card contract does not allow index replacement until LIBOR is unavailable?
 
A:   As discussed above in LIBOR Credit Card FAQ 3, a card issuer may only replace the index on a credit card account if certain conditions are met. Relevant to the LIBOR transition, two options for replacing the index for a credit card are: 1) when LIBOR is unavailable (Unavailable Provision) or 2) on or after April 1, 2022, (LIBOR-Specific Provision). Contractual language may limit which option in Regulation Z a card issuer may use, and which replacement indices may be selected. Contractual language may also require a card issuer to wait until LIBOR is unavailable before it replaces the index. Comment 55(b)(7)-1.
 
 
 
This Q&A was created based on information from the Consumer Financial Protection Bureau’s website (which may be updated from time to time) that provides Answers to Frequently Asked Questions on the Transition Away from LIBOR.  This information may be found here:  https://files.consumerfinance.gov/f/documents/cfpb_libor-transition_faqs.pdf
 

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