Question: Can the credit union extend a credit card account to a non-working spouse under Regulation Z’s Ability to Repay?

Answer: Assuming an applicant is age 21 or older the Rule states: in determining a consumer’s ability to repay, the rule permits issuers to consider income or assets to which an applicant or accountholder who is 21 or older - thus subject to 1026.51(a) – has a reasonable expectation of access.

Furthermore the Official Interpretations to this section goes on to state for instance: Assume that an applicant is not employed and that the applicant is age 21 or older, if a non-applicant’s salary or other income is deposited regularly into a joint account shared with the applicant, a card issuer is permitted to consider the amount of the non-applicant’s income that is being deposited regularly into the account to be the applicant’s current income for purposes of the regulation.

Question: Do the ability to repay rules contain any exception for share-secured credit card accounts?

Answer: No. The rule does not have an exception for share-secured credit card accounts. Therefore, a consumer would be required to have either an independent source of income sufficient to make the required payments or have a cosigner, guarantor or a joint applicant on the account.

Source: CUNA

Question: Our credit union wants to waive interest charges for the first six months for new cards. Are the same rules in place as when “promotional rates” are offered?

Answer: Yes. Promotional programs that waive interest charges for a specified period of time are subject to the same Credit Card Act protections as promotional programs that apply a reduced rate for a specified period. For example, a card issuer that offers to waive interest charges for six months will be prohibited from revoking the waiver and charging interest during the six-month period, unless the account becomes more than 60 days delinquent.

Source: CUNA

Question: Our credit union wants to charge an application fee for new cards. Are these fees covered by same rules as fees charged after a credit card account is opened?

Answer: Yes. Application and similar fees that a consumer is required to pay before a credit card account is opened are covered by the same Credit Card Act limitations as fees charged during the first year after the account is opened. Because the total amount of these fees cannot exceed 25% of the account's initial credit limit, a card issuer that, for example, charges a $75 fee to apply for a credit card with a $400 credit limit generally will not be permitted to charge more than $25 in additional fees during the first year after account opening.

Source: CUNA

Question: If a payment is received the first business day after the due date because we are closed on the due date, we are not able to count that payment as late for any reason, correct? Is this for all open-end loans (excluding home secured)? Are we still able to assess interest because the payment is made after the due date?

Answer: If the credit union does not receive or accept payments by mail on the payment due date when for example, the creditor's offices are closed due to a weekend or holiday, the credit union may generally not treat a payment received the next business day as late for any purpose. However, this doesn't prevent the creditor from assessing interest on the account. This provision applies to all open-end loans.
If the credit union accepts or receives payments made on the due date by a method other than mail, such as electronic or telephone payments, the credit union may treat a payment made by one of those methods on the next business day as late, even if it does not accept mailed payments on the due date.

Source: CUNA

Question: For years we have had fixed-rate cards, and advertised/disclosed them as such. As we understand the new changes, in the future, rates that are described as fixed without a period specified for the fixed rate, may not be increased while the credit plan is open. Does this mean that unless we change to variable rate cards, we may no longer increase the interest rate with a change of terms notice?

Answer: Yes. The final rule generally provides that a disclosure may not refer to an APR as "fixed" or use a similar term, unless the disclosure also specifies a time period that the rate will be fixed and the rate must not increase during that time period. If no time period is provided, the rate will remain "fixed" while the loan is open. For this reason, credit unions should refrain from using the term “fixed” unless the same rate is intended to apply to the account for the life of the account. If the credit union’s account opening document has reserved the right to make changes to the account such as increasing the APR, the credit union should refer to the rate as non-variable or simply as the “rate” rather than as “fixed.” If the term "fixed" is not used, a credit union should be able to increase the APR on a non-variable account by providing a 45-day advance notice of change in terms.

Source: CUNA

Question: If our member gave someone his credit card number to make an online purchase and that person takes the number and purchases several other times against the Visa, what is the credit unions liability? Would we have to refund the member for the purchases that were made with the Visa, or would the member need to take action against the person who made the transactions against their account?

Answer: Under Reg Z 12 CFR 1026.12, the member has the limited liability of $50 for unauthorized use.
However, in the commentary on 1026.12(b)(1)(ii) we have the following: "3. Implied or apparent authority. If a cardholder furnishes a credit card and grants authority to make credit transactions to a person (such as a family member or coworker) who exceeds the authority given, the cardholder is liable for the transaction(s) unless the cardholder has notified the creditor that use of the credit card by that person is no longer authorized."

Because the member provided apparent authority to his friend to make that first purchase, he is liable for everything.

Source: Northwest Credit Union Association, June 26, 2012

Question: Can we take funds from our member’s deposit accounts to cover delinquent balances on credit card accounts?

Answer: That will depend on the agreement that your member has signed to grant the credit union this right. Regulation Z, Truth in Lending (1026.12(d)), placed greater restrictions on using a members deposit account funds to set-off their credit card account. Credit unions cannot apply the funds deposited into deposit accounts as a set-off to unpaid contractual obligations unless the following conditions are met:

1. The member must be aware that they are granting a security interest as a condition for the credit card account and must intend to grant the interest in the deposit account;
    
2. The member must separately initial or sign the agreement indicating that a security interest has been given;
    
3. The security agreement must be on a separate page or separated from other contract and disclosure provisions; and,
    
4. The security agreement must reference a specific amount of deposited funds or a specific account number.

Question: Does the Military Lending Act (MLA) impact credit cards?

Answer: MLA compliance for credit cards took effect October 3, 2017. The Servicemembers (and Dependent) Consumer Lending: Summary (Military Lending Act) page has more information on how to comply.