SALE! BOGO! DOORBUSTER!: Running promotions on your credit cards

In my opinion, the first Sunday after the Super Bowl is the most depressing day of the year. After months of having every Sunday filled with excitement and record-breaking moments, you suddenly have a day with nothing to do. And that’s just depressing. So, I filled my day with a trip to the mall. Pause – I’ll give you all a moment to recover from the shock that there’s still someone out there who doesn’t shop online. . . I always prefer the mall because most of the stores are so desperate to get people in the door that they give you really great discounts that you often can’t get online. They all have these colorful signs in the windows advertising discounts on your entire purchase or free gifts with your purchase.

Like any other business, credit unions also use these kinds of flashy offers to attract customers. However, unlike the stores at the mall, credit unions have to comply with a number of different requirements for their offers. From advertising to account opening and beyond, the rules are complex and can be hard to follow. Today’s post will focus on the rules for how long credit unions must honor a promotional rate on a credit card. The rules below apply for both new accounts and promotions on existing accounts.

Generally speaking, the credit card rules in Regulation Z prohibit credit unions from increasing the rate on a credit card unless a specific exception applies. One of those exceptions – contained in section 1026.55(b)(1) – allows credit unions to increase the rate after the expiration of a promotional period.  The promotional period must be at least six months. Well, that’s pretty easy, right? Not so fast. The commentary actually provides two different methods for calculating the promotional period depending on the types of transactions subject to the promotional rate – multiple transactions or one-time transactions.

 

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