What to do with the extra: Reg Z’s options for dealing with positive credit balances

Sometimes funds show up in unexpected places… like as a positive balance on members’ open-end lines of credit. In particular, some members overpay their credit card bills. It could be an accident, perhaps due to an automatic bill payment in an amount that is too high or a member writing a check for a wrong amount. Members may also pay too much purposefully to build a cushion against future expenses. The positive balance sitting in a credit account is a little uncanny.

Regulation Z gives credit unions options on what to do with any credit balance in excess of $1 on an open-end credit account. Section 1026.11(a) and its commentary offers 3 options for dealing with the positive balance.

Return Funds Immediately to the Member

Cutting through the clutter, the commentary makes it clear that a credit union can satisfy its Regulation Z obligations by sending the money back. Paragraph 11(a)(1) requires that a credit union first accept the funds and credit them to the account, establishing the credit balance. However, it is permissible to then refund the excess and clear the balance: “The creditor may also fulfill its obligations under §1026.11 by … [r]efunding any credit balance to the consumer immediately.” 12 C.F.R. Part 1026, Supp. I, comment 11(a)-1.i. Refunds can be made by cash, check, money order, or a credit to the member’s share account. 12 C.F.R. § 1026.11(a)(3). A credit union is not required to wait for a member to request the money or for any period of time to run before returning it. 12 C.F.R. Part 1026, Supp. I, comment 11(a)-1.ii.


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