Posted by Steve Van Beek
- Bankruptcy Act of 2005 requires minimum payment warnings
- Federal Reserve proposes and finalizes minimum payment warnings effective July 1, 2010 - these notices gave the option of a "generic example" or the actual disclosure
- Credit CARD Act amends the Truth in Lending Act (superseding the Bankruptcy Act requirements) and requires actual disclosures and disclosures about how to pay off the balance in 36 months
- Federal Reserve proposes and finalizes new minimum payment warnings effective February 22, 2010 according to the requirements in the Credit CARD Act.
The new requirements are going to require 1 of 3 minimum payment disclosures on a member's account - depending upon that member's particular situation. Thus, credit unions will need to work with their processors to be sure their systems can identify and reproduce which minimum payment warning needs to be produced.
This requirement applies to credit card periodic statements mailed or delivered on or after February 22, 2010 (see page 5).
- If a member, paying only the minimum payment, will not pay off the account in 3 years.
- If a member, paying only the minimum payment, will pay off the account in 3 years or less.
- If a member, paying only the minimum payment, will never pay off the balance on the account.
"Minimum payment repayment estimate disclosed on the periodic statement is three years or less. Section 226.7(b)(12)(i)(F)(2)(i) provides that a credit card issuer is not required to provide the disclosures related to repayment in 36 months if the minimum payment repayment estimate disclosed under § 226.7(b)(12)(i)(B) after rounding is 3 years or less. For example, if the minimum payment repayment estimate is 2 years 6 months to 3 years 5 months, issuers would be required under § 226.7(b)(12)(i)(B) to disclose that it would take 3 years to pay off the balance in full if making only the minimum payment. In these cases, an issuer would not be required to disclose the 36- month disclosures on the periodic statement because the minimum payment repayment estimate disclosed to the consumer on the periodic statement (after rounding) is 3 years or less."