Reg Z Proposal: Crediting of Payments, Address Change
Posted by Sarah Loats
The Credit CARD Act provides that if the due date for a credit card payment is on a day that the credit union does not receive or accept payments by mail, it may not treat a payment received by any method the next business day as late for any purpose. For example, if a due date lands on a Sunday one month, the credit union would have to treat a payment received on Monday as timely. The Board's proposed rule implements this requirement in section 226.10(d), which clarifies that if the credit union accepts or recieves payments made on the due date by a method other than mail, such as electronic or telephone payments, the credit union is not required to treat a payment made by that method on the next business day as timely. The Board is also proposing to apply this to all open-end lending, not just credit cards, in order to have one consistent rule.
Also, if the credit union makes a material change to the address for receiving credit card payments, it cannot charge a late fee, and such change causes a delay in the crediting of a payment for the 60-day period following he change, the credit union cannot charge a late fee. Here is the applicable text. One of the proposed comments provides a safe harbor:
3. Safe harbor. A card issuer may elect not to impose a late fee or finance charge on a consumerâÂÂs account for the 60-day period following a change in address for receiving payment or procedures for handling cardholder payments which could reasonably be expected to cause a material delay in crediting of a payment to the consumerâÂÂs account.
Oh, and as a little side note, the House Financial Services Committee approved legislation yesterday to establish the CFPA. They also approved the bill to move the effective date of the CARD Act to December 1st.
Happy Friday everyone!