Credit CARD Act May Affect Your Loan Statement and Due Date

Credit CARD Act Frequently Asked Questions

Overview: On December 18, 2008, the Federal Reserve Board approved new rules for credit cards affecting Regulations AA and Z. Following these revisions, the Credit CARD Act of 2009 was signed into law on May 22, 2009, which takes precedence over the Federal Reserve regulations. Where an overlap in the laws may occur, the Act must be followed. Since then, financial institutions have been studying the implications of the new law and working to implement the changes. As of August 20, 2009, some of the provisions have become law. More will follow in February of 2010 and then again in July of 2010. Below are questions and answers regarding the first phase of regulations that took effect on August 20, 2009.

Why does the Credit CARD Act affect my non-credit card loan?
The law was written using terminology that has far-reaching implications as it addresses open-end loans, not specifically targeting the single product line of credit cards. Therefore, it must be applied to all open-end loans. For West Coast Federal Employees Credit Union (WCFECU) members, this includes all loans and lines of credit except 1st or 2nd closed-end mortgage loans and Indenture loans.

Why is my payment due date changing?
The new law states that statements must be mailed at least 21 days before the due date and at least 21 days prior to the end of the grace period. System limitations have forced us to move the due date back to the 28th of the month or later to comply. We are trying to make compliance as transparent as possible with the least amount of disruption to our members.

Why is my car loan affected?
At WCFECU, car loans arranged directly with us are open-end loans. They are classified as open-end because once you have established the loan agreement with us you do not have to complete a new application for your next auto loan. We can simply fund the next vehicle with the application and loan agreement we already have on file, saving you time and getting you into your next vehicle faster. Since the paperwork is ongoing to the next loan, it is considered and open-end loan.

Why am I getting a monthly statement when I already have a coupon book or on automatic payments?
With the new law, you must receive a statement for your open-end loan a minimum of 21 days in advance of the due date. Coupon books and recurring payment authorization forms do not meet the regulatory statement requirement.

Can I opt out of the loan statement?
No. The law does not allow us to opt you out of the monthly loan statement at this time.

Can I continue to pay my loan on my current schedule even if my due date is moved back to the 28th?
Yes. You can continue to pay your loans earlier in the month. You will just be paying it earlier than it is actually due, so there will be no adverse affect.

Can I continue to have automatic transfers for loan payments and can they remain on the current transfer date?
In most instances, you may continue to have automatic transfers on the currently scheduled date. There is an exception for the Line of Credit Overdraft Protection account, which has a variable monthly payment. For those accounts, we will need to convert to monthly cash payments.

Why does my monthly statement list one monthly payment when I have automatic transfers on a different schedule – bi-weekly, weekly, semi-monthly, etc?
The law requires us to provide a statement listing the payment due at least 21 days before the due date and does not allow for listing multiple due dates on the same statement. Therefore, if you pay on a bi-weekly schedule, we would need to mail overlapping statements. For example: For bi-weekly payments due on 9/4/09 and 9/18/09, we would need to mail a statement on 8/14/09 listing the payment due on 9/4/09 and a statement on 8/28/09 listing the payment due on 9/18/09. Due to the cost, system restrictions and confusion that this would create, WCFECU has opted to send one statement each month listing the total monthly payment due by the 28th. The automatic transfers will continue on the current schedule.

Will this affect my loans elsewhere?
As we do not know what other loans you may have or where all of your loans are, we cannot address this question with you. However, as the regulation affects all open-end loans regardless of the financial institution, you may want to check your loan due dates for any changes.

What other terms have changed?
The only change WCFECU has had to address is the statement notice prior to the due date. All other terms and conditions have not been affected at this point.

WCFECU strives to bring you the highest quality loan service we can provide. We recommend you monitor your loan accounts actively within the next few months so you know how the new laws affect you. Though this is a minor change for our credit union at this point, many other financial institutions have changed their terms and programs drastically. We recommend you review your loan terms, particularly the rates, fees and due dates over the next few months. As always, we are ready to discuss any loan with you and assist in any consolidation where applicable.