OCC Issues Advisory Letter on Secured Credit Cards

This advisory letter also discusses the OCC's particular concerns regarding secured credit card programs in which security deposits (and fees) are charged to the credit card account, with the result that the consumer has little or no available credit or card utility at account opening. In addition to presenting increased risks of default, customer confusion, and other adverse consequences, this structure may constitute an unfair practice under the applicable standards of the Federal Trade Commission Act (FTC Act). Accordingly, the OCC has determined that this type of secured credit card product is not appropriate for national banks, and should not be offered by them.