Re:Section 163. Timing of Payments as it relates to the
mailing or delivering of periodic statements 21 days or more before the payment due date in order to charge a late fee. - Does this this section apply to all open end consumer credit plans or just to credit cards.

Rosie,

I just found out today that this also applies to HELOC's even if a credit card is not attached and to overdraft protection programs. Not sure is this answers your question though.

all open-end plans, regardless of whether those plans have any collateral.

Where do I find a copy of the Act?

bump

Another question please. What about accounts that only receive loan bill notices and not statements?

TILA definitions: Section 1601(i) The term “open end credit plan” means a plan under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and which provides for a finance charge which may be computed from time to time on the outstanding unpaid balance.

Closest thing to a definition of periodic statement in TILA, Section 1637(b): Statement required with each billing cycle
The creditor of any account under an open end consumer credit plan shall transmit to the obligor, for each billing cycle at the end of which there is an outstanding balance in that account or with respect to which a finance charge is imposed,...

If your accounts meet these criteria, then the 21-day rule applies.

I have seen where the 21 day mailing (in addition to other provisions in the Act) may apply to home equity lines of credit, overdraft protection, and personal lines of credit

If we have existing accounts that apply to the 21 day rule, will we have to change the due dates and redisclose to those customers since the original note states the due date? Or will those existing accounts be "grandfathered" from the 21 day rule?

No grandfathering known at this time, and not likely to be announced before you'll have to do something for anyone needing to pay by 8/20/09.

CO in Training - you hit the question of the hour. If you can't somehow bump up the statement preparation a few days in order to have statements in the mail at least 21 days before due date, then you either forego late fees on that batch of accounts or need another solution. That other solution may be to re-work your billing cycles on some accounts in order for more, or all, to be mailed their statements at least 21 days before due date. And yes, if you re-work the billing cycles and change due dates, then under 226.9(c), you need to give the 15-day advance notice of the change.

As if that's not enough, it's arguable that changing the billing cycles and due dates for credit card accounts would fall into the Credit CARD Act's new 45-day advance notice rule for "other significant changes."

counting down from 53 days....

We are extending our credit card grace period to 25 days (previously 20) however our billing cycle dates should not be impacted. Since our agreements state 'at least 20 days' and the extension to 25 is in favor of the cardholder, we are not planning any CIT notices for that specific change.

Tyond - how does that change in grace period meet the "mailed or delivered to the consumer not later than 21 days before the payment due date" requirement? The focus of Section 106, revising TILA 163, seems to be on the mailing of the statement more than the length of any grace period....

Phoenix,

Thank you for the clarification!

We send out our HELOC statements 10 days before the due date and will be changing to 21 days. So since this change will be to the customers benefit do we still need to send out the 15 day prior written notice? 226.9 (c)

bump

Phoenix, in a 6/29/09 post, you commented "counting down from 53 days..." Is this referring to a new date to implement another requirement, and if so, where can this be found?

Just the Section 101 and Section 106 parts that are effective 90 days after the 5/22/09 signing of the Act, therefore 8/20/09.

I just received an OTS CEO Memorandum dated June 25, 2009, regarding the new credit card rules and no where in the memoradum does it refer to open end credit plans it only talks about credit cards. So I am really confused. I have e mailed someone at OTS to get a clarification on this. I will let you all know when I hear back from them.

Everything I have seen on the Act indicated it applies only to credit card accounts. Could anyone provide a link to additional documentation indicating this also covers other open-end accounts not tied to credit cards?

From Amended TIL Act section 163:

Length of billing period.—
(1) In general.—
Section 163 of the Truth in Lending Act (15 U.S.C. 1666b) is amended to read as follows:
“SEC. 163. Timing of payments.
“(a) Time To make payments.—A creditor may not treat a payment on an open end consumer credit plan as late for any purpose, unless the creditor has adopted reasonable procedures designed to ensure that each periodic statement including the information required by section 127(b) is mailed or delivered to the consumer not later than 21 days before the payment due date.
“(b) Grace period.—If an open end consumer credit plan provides a time period within which an obligor may repay any portion of the credit extended without incurring an additional finance charge, such additional finance charge may not be imposed with respect to such portion of the credit extended for the billing cycle of which such period is a part, unless a statement which includes the amount upon which the finance charge for the period is based was mailed or delivered to the consumer not later than 21 days before the date specified in the statement by which payment must be made in order to avoid imposition of that finance charge.”.

Thanks Ahou. Guess I overlooked that it was not limited to credit cards.

Update --- Received an answer to the question of whether section 163 applies to all open end credit plans. They (the OTS) suspects that the new law does apply beyond credit cards but since the new law is an amendment to TILA, it's the Fed's job to interpret it. So OTS says we'll have to wait and see if the Fed issues guidance on the. OTS says that we should have better info on this in a few weeks.

This is probably a very elementary question, but here goes: Is the "as of" statement cut-off date considered to be the same date that the statement is "mailed or delivered" to the consumer?

Amended TILA states "is mailed or delivered to the consumer not later than 21 days before the payment due date." So you would have to mail or deliver 21 days before the pmt is due. Your stmt cut off date would be 2 or 3 days prior to the day you mail - to give you time to process the stmt for mailing.

So as am I reading 163b - if a grace period (the time period to repay without incurring additional f/c) is provided, no f/c can be applied unless the billing statement is mailed 21 days before the date stated to avoid the f/c (expiration of the grace period). This is why we are extending our grace period from 20 days to 25. Did you all interpret differently?