ARLINGTON, Va. – With two provisions of the Credit CARD Act going into effect this week, a new survey shows most credit unions expect their compliance demands are only going to increase.
NAFCU said an online survey of its membership has found most respondents indicating they are preparing for the additional burdens. Fifty-seven percent indicated they expect the Act, aimed at cracking down on abuses and at better protecting consumers, to decrease credit availability, while the rest do not expect any effect at all.
One provision calls for notifications to be sent of rate changes, which both CU trade groups have been actively working to have changed. As a result, said NAFCU, 39.3% said they are considering steps to tighten their underwriting requirements due to the Credit CARD Act, while 23% are considering a move to variable rates.
Going into effect on Aug. 20 is Section 101 of the new law, which applies only to credit cards and requires that change-in-term notices be provided at least 45 days in advance before increasing the annual percentage rate (APR) or changing significant terms, rather than the current 15-day notice period.
Also going into effect is Section 106, which applies to all open-end credit in addition to credit card accounts, requires periodic statements be provided at least 21 days before the payment due date (or the end of a grace period) in order for the credit union to charge a late fee, report the account as delinquent to credit bureaus, or impose a penalty rate.
Separately, NAFCU said the survey found most CUs expect their regulatory burden to increase should the June 30th proposal for a consumer finance protection agency come into effect. The rough estimate respondents stated of their credit union’s annual regulatory costs due to a duplicate agency was an average of $45,120, NAFCU reported.
