Timing Requirements for Periodic Statements
Written by Jennifer Aguilar, Senior Regulatory Compliance Counsel, NAFCU
Periodic statements are required for various types of accounts that credit unions offer. While sending a periodic statement is essential to ensuring compliance with the periodic statement requirements, it is also important to send it at the right time. Timing is also important because notice requirements for error resolution under Regulation E and billing errors under Regulation Z are, in part, dependent on when a periodic statement is sent.
For share accounts, such as savings and checking accounts, the periodic statement rules are in Regulation E. While section 707.6 of NCUA’s Truth in Savings regulation provides disclosure requirements for periodic statements, it does not actually require credit unions to provide statements. Instead, section 1005.9(b) of Regulation E requires statements for each month in which an electronic fund transfer is made to or from the account. Neither the rule nor the commentary provides a specific timing requirement for when the statement must be sent after the close of the month. Credit unions may want to review any applicable state law and account agreements to determine whether they impose any specific timing requirement. In the absence of any state law or contractual provision, it will be up to the credit union to determine when to provide the periodic statement. In making this determination, credit unions may also want to consider that the timeline for reporting errors does not begin until a periodic statement is sent.
The rules for certain lending products provide more clear timing requirements. Before diving in to these rules, it is important to note that Regulation Z only has a periodic statement requirement for closed-end mortgages. Credit unions are not required to provide statements for products such as personal loans, car loans or private education loans. For these loans, credit unions will need to look to state law or the loan agreement for any periodic statement requirements.
For open-end lines of credit, the timing requirements are stated in section 1026.5(b)(2)(ii) of Regulation Z. Periodic statements are required for each billing cycle where one of the following is true: (a) a debit or credit balance of at least $1 exists at the end of the billing cycle or (b) a finance charge was imposed during the billing cycle. As for the timing, the rules differ based on the type of account involved:
- Credit card accounts: periodic statements must be sent at least 21 days before the payment due date that is disclosed on the statement.
- All other open-end accounts: periodic statements must be sent at least 14 days before the date the payment must be received in order to avoid being treated as a late payment (usually the payment due date). If a grace period applies to the account, the statement must also be sent at least 21 days before the end of the grace period.
For closed-end mortgages, the timing requirements are stated in section 1026.41(b). Periodic statements are required for each billing cycle must be sent within a “reasonably prompt time” after the payment due date or end of any courtesy period for the previous billing cycle. The commentary to this rules explains that four days is considered a reasonably prompt time. Credit unions may need to review their loan agreements to determine whether a courtesy period (time period when no late fee is imposed) applies to the particular loan involved. Small servicers are exempt from sending periodic statements for closed-end mortgage loans.