Are you taking advantage of Reg Z’s safe harbor credit card penalty fees?

It’s the start of a new year, which means the CFPB’s latest safe harbor credit card penalty fee amounts under Regulation Z, section 1026.52(b), became effective January 1, 2020. 

This section of Regulation Z provides “safe harbor” figures you may charge cardholders who:

  • Make late payments
  • Go over their credit limit
  • Have a returned payment

The recent changes include:

  • The $28-dollar amount for the initial violation has been increased to $29
  • The $39-dollar amount for subsequent violations has been increased to $40

If you are a federal credit union, you are free to charge these fees. If you are a state-chartered credit union, you may be required to charge lesser amounts; it will depend on your state’s penalty fee laws.

There are many factors that go into determining the amount of fees you charge members. Are you looking to increase your non-interest income? Better offset the costs of administering your credit card programs? Take a closer look at whether you can use the Reg Z safe harbor fees. They may part of a compliant solution. Of course, you can charge amounts less than the safe harbor maximums and still fall under the safe harbor.

To take advantage of safe harbor fees right away, reach out to your lending document vendor for a consultative session today. By customizing your credit card disclosures and agreements, you can offset administration costs and guarantee compliance with Regulation Z.

Read the full CFPB announcement here.

Cathy Klimek

Cathy Klimek

Cathy is a consumer lending and insurance compliance and regulatory attorney with 20+ years of experience working with credit unions and other types of financial institutions. She concentrates her practice ... Web: Details

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