Exploring Regulation Z’s opt-in requirement for over-the-limit fees
NAFCU has covered many of the different credit card rules in past Compliance Blog posts. However, one topic we haven’t covered lately is the requirements around charging members for exceeding a credit limit. Section 1026.56 covers the rules for over-the-limit transactions on a credit card. An over-the-limit transaction is “any extension of credit by a card issuer to complete a transaction that causes a consumer’s credit card account balance to exceed the credit limit.” Today’s post addresses the opt in process for over-the-limit transactions and related fees.
Section 1026.56(b) provides a blanket prohibition on charging a fee when a member exceeds a credit limit unless the credit union has properly obtained the member’s consent. The rule provides a five-step process for obtaining consent:
- Providing a notice, segregated from all other information, describing the member’s right to opt-in to the credit union’s payment of over-the-limit transactions;
- Providing the member with a reasonable opportunity to opt-in;
continue reading »
