Last year, President Obama signed into law the Credit Card Accountability and Disclosure Act of 2009, which includes many provisions that go into effect Feb. 22. The intent of the Card Act was to establish fair and transparent practices pertaining to credits cards. At Zions Bank we have always believed in treating our clients fairly and we welcome this type of legislation.

While the Card Act has resulted in significant changes for many card issuers, the impact to Zions Bank has been minimal since we have never engaged in the “unfair and deceptive” practices addressed in this new law. Let me share with you a few examples of how we’ve approached some of the issues addressed in the Card Act over the years.

  • Universal Default – The Card Act eliminates “universal default,” which occurs when issuers increase interest rates for clients who miss a payment on any other account. The average default rate in the U.S. is nearly 29 percent, and 90 percent of the credit cards in the country have penalty rates. Zions Bank has never practiced universal default. In fact, we don’t have any default or penalty rate pricing.
  • Time to Pay – The Card Act mandates that cardholders must be mailed their statements 21 days before the due date. Zions Bank’s statements have always been mailed at least 21 days before the due date. In addition, Zions Bank consumer cardholders have a full 25-day grace period to pay their balance before interest is charged on new purchases.
  • Rate Increases – Cardholders are protected against arbitrary interest rate increases under the provisions in the Card Act. Zions Bank does not increase interest rates arbitrarily. In fact, the last time Zions Bank raised interest rates on new credit card purchases was July 2006, since our credit card interest rates are tied to the Prime Rate. As the Prime Rate started dropping in late 2006, all of our interest rates for purchases have come down and have stayed at record lows since December 2008. (Note: Credit card interest rates in the U.S. currently average 14 percent. Zions Bank’s rates are between 7 percent and 12.25 percent on new purchases.)
  • Allocation of Payments – The Card Act states that cardholders must receive fair allocation of their payments to different balance rates. Ninety-five percent of cards allow issuers to apply payments in a manner that the Federal Reserve found “likely to cause substantial monetary injury to consumers.” Zions Bank allocates payments fairly to different balance rates.
  • Double-Cycle Billing – Under the provisions in the Card Act, issuers are prohibited from double-cycle billing, a practice that hurts cardholders who pay off their balances in full in one statement cycle, but not the next. Zions Bank has never practiced double-cycle billing.

    • Zions Bank’s Guiding Principles state that our goal is to create value. These principles also state that we will conduct our business with integrity and decency and will strive to treat our customers with respect and appreciation. At a time when many of our competitors need to make significant changes in their credit card practices, I am proud of the fact that the newly legislated practices of fairness and transparency are the practices we have followed for years.

    To our clients, our communities, our employees and our shareholders, this serves as yet another example that we haven’t forgotten who keeps us in business.

    View Zions Bank’s credit and debit card options.

    Scott Anderson is president and CEO of Zions Bank

    Featured in the January/February 2010 issue of Zions Bank’s Community magazine.

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