Timing of Over the Limit Fees; Overview Document
Editor's Note: NAFCU will open 2 hours late due to the Federal Goverment's decision to do the same for its DC-area offices.
Posted by Anthony Demangone
The Regulation Z requirements taking affect February 22 are confusing. There are a ton of moving parts. Case in point...over the limit fees.  Here's what I mean. Starting on February 22, you cannot charge over the limit fees without following the new over-the-limit fee opt-in requirements. But wait a minute...the new requirement kicks in on the 22nd. Can you still charge an over-the-limit fee for transactions that took place earlier in the month?  It isn't clear from the reg itself.Â
But remember the 37 pages of the final rule that deals with transitions and mandatory compliance dates? What does that say?
For credit card accounts opened prior to February 22, 2010, a card issuer may elect to provide an opt-in notice to all of its account-holders on or with the first periodic statement sent after the effective date of the final rule. Card issuers that choose to do so are prohibited from assessing any over-the-limit fees or charges after the effective date of the rule and prior to providing the opt-in notice, and subsequently could not assess any such fees or charges unless and until the consumer opts in and the card issuer sends written confirmation of the opt-in. The final rule does not, however, require that a card issuer waive fees that are incurred in connection with over-the-limit transactions that occur prior to February 22, 2010 even if the consumer has not opted in by the effective date. Thus, for example, a card issuer may assess fees if the consumer engages in an over-the-limit transaction prior to February 22, 2010, but the transaction posts or is charged to the account after that date, even if the consumer has not opted in by the effective date. Final rule, p. 521. That's the beauty of the "preamble" or discussion portion of a final rule. It just comes out and says what the rule sort of says. At least some of the time.
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Hey NAFCU members. We've updated the Reg Z 2/22 Overview Document, adding a new overview for Section 226.55 - Limitations on Increasing APRs, Fees and Charges.  It is available here. We should have the updated document available by midday.
Non-NAFCU members...you'll get a copy of this document if you sign up for tomorrow's webcast. See below for a link where you can sign up.
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Possibly of interest:
- Don't forget tomorrow's webcast on Reg E (ODP) and Reg Z (2/22/10Â Reg Z changes.)
- Come meet the NAFCU Compliance Team and Learn "Some Compliance!" March 22-26, Gaylord National, Maryland.
- Come join us next fall for NAFCU's Regulatory Compliance Seminar (clap clap clap clap) deep in the heart of Texas.