WASHINGTON (12/19/08)—The National Credit Union Administration (NCUA) Thursday approved a final rule that would ban some of the worst unfair and deceptive credit card practices and said its rule is substantively identical to that adopted by federal bank and thrift regulators. Effective July 1, 2010, the rule prohibits the following five practices:
* Providing insufficient time for consumers to make payments; * Failing to provide reasonable allocation of payments among balances with different interest rates; * Applying increased in annual percentage rates to pre-existing balances; * Calculating finance charges using double-cycle billing, which computes finance charges using the average daily balance from the last two billing cycles rather than only the most recent billing cycle; and * Requiring excessive security deposits and account-opening fees for the issuance or availability of credit.
The final rule does not include provisions that were in the proposal issued in April 2008 that addressed holds placed on available credit. The NCUA rule applies to federally chartered credit unions, but not to state-chartereds, which fall under Federal Trade Commission (FTC) regulation. The NCUA staff noted that the FTC has no intention to adopt a similar rule but has indicated it will go after unfair or deceptive practices on a case-by-case basis. The NCUA had also proposed, in conjunction with the Federal Reserve Board and Office of Thrift Supervision, a couple of revisions affecting overdraft protections, which would have addressed such things as members’ opt-out rights, disclosures and overdrafts due to debit holds. The Fed on Thursday adopted the credit card rule but issued a revised overdraft proposal for public comment. The NCUA said it will take no further action on the overdraft proposal because, if adopted, the Fed plan would cover the activities of federal credit unions. Use the resource link below to access the NCUA fair practices rule.