Recently we posted an article about the Credit CARD Act and its implications to consumers: President Obama Signs Act to Help Consumers With Credit Cards. All in all, it’s a good thing for consumers when you consider that the purpose of the new regulation is meant to offer more protection from things like unintentionally going over your credit limit, rate changes without ample notice, etc.
Part of the Act says that all statements must be sent at least 21 days in advance of your payment due date. This goes into effect August 20, 2009, and all banks and credit unions are supposed to be in compliance by then. The credit card part of the Act isn’t a big deal, because people are used to receiving a credit card monthly statement.
BUT, since we posted our original article, we’ve learned that the Credit CARD Act also includes other types of “open end” loans in addition to credit cards, like overdraft and home equity lines-of-credit, signature and even some auto loans. This is the part that has left us scratching our heads, and here’s why…
To quote a credit union colleague, many of our members don’t want statements for certain types of loans.
For example, auto loan payments are the same every month and most of our members have theirs set up on automatic payment. Or, members choose coupon books. We’ve been setting up auto loans with coupon books since any of us can remember. Automatic payments and coupon books are a lot cheaper than sending you a monthly statement, and cuts down on the amount of paper you receive in the mail.
But with the new legislation, simply setting up automatic payments or coupon books will essentially be “illegal” come August 20. This means you will start receiving statements for loans you’ve never gotten statements for. We don’t really want to send them, but we must in order to be in compliance with this new Credit CARD Act.
To that end, we’re aggressively looking for ways to comply with the new regulation while having as little impact as possible on your convenience AND on the credit union’s bottom line. There are several solutions on the table, all of which pose substantial challenges.
Interestingly enough, the new regulation is open for public comment only AFTER its effective date…
All I can say at this point is that, if you’re one of the thousands of members with an auto loan, an overdraft line-of-credit, a home equity line-of-credit, etc., you will be tagged with communications from us about this new law. I’m not alone in wanting to apologize in advance for whatever direct or indirect inconvenience this may cause. It’s just one of those things we must do to comply with the new regulation.
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