Reg Z Credit Card Act...Not Just Credit Cards
By Amy Kudlacek
Another amendment to Reg Z has popped up on financial institutions. These rules, released on July 15th, go into effect on August 20, 2009. Yep - that's right - they gave you just a little over a month to implement these requirements.
The rule requires institutions to "adopt reasonable procedures designed to ensure periodic statements are mailed or delivered no later than 21 days before the payment due date on ALL open-end consumer credit accounts." There are conflicting opinions as to whether the 21 day rule applies if you do not charge any late fees or penalties, or report to a credit bureau. Until we receive clarification from the regulators, we recommend that you take the conservative approach and comply with the 21 day rule across the board for "ALL open-end consumer credit accounts."
In calculating the 21 days, you cannot include any grace period. So, if your statements cut on the 1st of each month, you cannot make the payment due until at least the 22nd. Many banks are allowing 24 days in case there is a weekend or holiday involved. For example, if the statement cuts on the 1st (Saturday), and Monday is a holiday, it won't be mailed until Tuesday. You must allow 21 days after mailing or delivery before the payment due date.
Many banks automatically debit a consumer's deposit account the day the overdraft protection or HELOC statement cuts (or the next day). Even though you may not charge any late fee or penalty, or report to the credit bureau, the conservative approach is to apply the rule to ALL open-end credit accounts and not set the payment due date (auto debit) until at least 21 days after mailing the statement.
Stay tuned to our newsletter for more details and clarifications!