Representatives of CUNA and NAFCU today urged lawmakers to be cautious before enacting legislation to revamp the rules regarding credit cards because going too far could hurt credit unions and limit consumer access to credit.
Congress is considering a measure that would ban interest-rate hikes on existing balances, over-the-limit fees, double-cycle billing. The cardholders could avoid a higher rate by canceling the card before the rate change takes effect.
Wright-Patt Credit Union President/CEO Douglas Fecher told members of a House subcommittee that the provision for a 45-day notice on rate increases should be reduced to 30 days because it is more compatible with a 30-day billing cycle. He also said giving credit unions only 90 days for was burdensome. He added, testifying on behalf of CUNA, the regulations recently approved by the Fed and the NCUA on this subject, which take effect next year, would give card issuers adequate time to make the transition.
NAFCU President/CEO Fred Becker said in a written statement that he opposed a provision banning rate increases on outstanding balances unless a customer paid late or if a promotional rate had expired. He said this provision would remove a key risk management tool for credit unions.
Both Fecher and Becker also expressed concerns about a bill that would put stricter regulations on overdraft protection services. Both said having these programs counted under the Truth in Lending Act would cause fees associated with them to count as finance charges and may cause the APR to exceed 18%, leading to a violation of the usury ceiling.
NCUA Associate General Counsel Sheila Albin also testified.
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