Credit Union Billing Problems Caused By Credit CARD Act Cleared By Representative Peter Welch

When the Credit Card Accountability, Responsibility and Disclosure Act of 2009 was signed into law earlier this year, it was not yet apparent that a particular legislation in the bill would have a problematic effect on credit unions.

According to Federal officials, the Credit CARD Act originally provided several basic provisions to consumers by prohibiting widespread predatory practices in the credit industry such as arbitrary rate hikes, double-cycle billing and tricks involving due dates. However, one specific provision, the one which makes 21 days the mandatory period before credit card companies could issue late fees on their credit card accounts, included not only credit card statements but all statements being sent out by financial institutions, credit unions included.

U.S. Representative Peter Welch immediately heard from credit unions after a few days had passed from the passing of the measure that the 21 day ruling of the Credit CARD Act would prevent credit unions from sending to their members their consolidated statement reports.

Association of Vermont Credit Unions Joe Bergeron said, “This really became a problem for credit unions”.

Bergeron explained that credit unions use a simplified billing practice which already includes all of their member’s open ended loans such as checking accounts, saving accounts and home equity loans in a single statement. This is done so as to save costs for their members.

According to the president and CEO of the River Valley Credit Union, Jeff Morse, “ The rule as written made it impossible for the credit unions to comply in order to have the members payments coincide with the new due dates required under the law previously written”.

Morse explained that the new provision basically destroys the single statement practice that credit unions follow when sending statements for their customers. As a result, it creates a big problem for automatic payments for credit union members who have new due dates placed within the 21 day period.

Fortunately for credit union credit card holders, the Credit CARD Technical Corrections Act was passed last Tuesday through a voice vote in Capitol Hill. Peter Welch was the sponsor of the bill which introduces adjustments into Credit CARD Act. Basically, the bill sponsored by Welch limits the 21 day ruling to credit card bills only.

Welch’s legislation passed relatively quickly through Congress and adjustments in the 21 day limit are now in place. The bill will affect around 92 million American consumers who are members of various credit unions all over the country.