I have a question about 226.10(d). How does the 5:00 P.M. cut-off time rule work if a bank has reduced hours on the customer's due date? For example, on Christmas Eve, we close at 3:00p.m.

I think I jumped the gun. Apparently, this is not a problem according to (3) below.

§ 226.10 Payments.

(a) General rule. A creditor shall credit a payment to the consumer's account as of the date of receipt, except when a delay in crediting does not result in a finance or other charge or except as provided in paragraph (b) of this section.

(b) Specific requirements for payments. (1) General rule. A creditor may specify reasonable requirements for payments that enable most consumers to make conforming payments.

(2) Examples of reasonable requirements for payments. Reasonable requirements for making payment may include:

(i) Requiring that payments be accompanied by the account number or payment stub;

(ii) Setting reasonable cut-off times for payments to be received by mail, by electronic means, by telephone, and in person (except as provided in paragraph (b)(3) of this section), provided that such cut-off times shall be no earlier than 5 p.m. on the payment due date at the location specified by the creditor for the receipt of such payments;

(iii) Specifying that only checks or money orders should be sent by mail;

(iv) Specifying that payment is to be made in U.S. dollars; or

(v) Specifying one particular address for receiving payments, such as a post office box.

(3) In-person payments on credit card accounts. (i) General. Notwithstanding § 226.10(b), payments on a credit card account under an open-end (not home-secured) consumer credit plan made in person at a branch or office of a card issuer that is a financial institution prior to the close of business of that branch or office shall be considered received on the date on which the consumer makes the payment. A card issuer that is a financial institution shall not impose a cut-off time earlier than the close of business for any such payments made in person at any branch or office of the card issuer at which such payments are accepted. Notwithstanding § 226.10(b)(2)(ii), a card issuer may impose a cut-off time earlier than 5 p.m. for such payments, if the close of business of the branch or office is earlier than 5 p.m.

Only in-person credit card payments fall under the "earlier cut-off time" allowance. Payments received by mail could not be treated as late if received the next business day. Would have to backdate.

(ii) Setting reasonable cut-off times for payments to be received by mail, by electronic means, by telephone, and in person (except as provided in paragraph (b)(3) of this section), provided that such cut-off times shall be no earlier than 5 p.m. on the payment due date at the location specified by the creditor for the receipt of such payments;

We have a cutoff time of 4pm for loan payments. Does this mean that we have to extend our payment cutoff times?

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I phoned FDIC yesterday and they told me that we do not have to change our cutoff times as long as we disclose to the customer what our times are & how & where to make a payment. (Our bank does not offer credit cards, just HELOCs)

So since our cutoff time is 4pm and we have disclosed to the customer that payments received after 4pm are considered the next business day, then we're OK and don't have to change the cutoff time to 5pm?

That's my understanding. We provide a disclosure at loan closing entitled Crediting of Payments, which describes how, when, where, and cutoff times for all locations. FDIC told me that this would work & we do not have to change our cutoff time to 5:00.

When you phoned the FDIC, did you get their reply in writing? We only offer HELOC and we have some personal lines of credit not secured by real estate. We are planning on back dating these payments as of right now.

That makes sense; the 5:00 p.m. cut-off time is listed as an example, not a requirement.

I'm not too sure that it's listed as an example.

on page 201 in the final rule issued 1/21/10 it states:

"In the October 2009 Reg Z proposal, the Board proposed to implement amended TILA Section 164n in a revised 226.10(b)(2)(ii) stated that a creditor may se reasonable cut-off times for payments to be received by mail, electronic means, by telephone and in person, provided that such cut-off times must be no earlier than 5 p.m. on the payment due date at the location specified by the creditor fro teh receipt of such payments. Creditors would be free to set later cut-off times; however,no cut-off time would be permitted earlier than 5 p.m. This paragraph, in accordance with amended TILA Section 164, would apply to payments received by mail, electronic means, telephone or in person, not only payments received by mail. The Board is adopting 226.10(b)(2)(ii) generally as proposed."

That being said, it seems that we would be required to change our current cut-off time from 4pm to 5pm.

Thoughts/Comments?

I agree with Ivc. The 5:00 cut off time is a requirement and not a suggestion (my interpretation). Has the final rule been published yet? If not, why are they waiting so close to the effective date of Feb. 22?????

The Federal Reserve published the final rule on 01/21/10 docket R-1370.

I guess I should have been a bit more specific. Doesn't this have to appear in the Federal Register before it becomes "official?"

I think so but as you said Feb 22 is next week.

I placed a call to the FDIC and if I don't hear back from them today I will be calling them again tomorrow.

I spoke to the FDIC this morning.

It is required that payments received for consumer open end credit plans by 5pm must be considered received that day.

Our current cutoff time for next day roll over is 4pm. We are going to implement a manual procedure to ensure that any consumer open end credit payments received between 4 to 5 are considered received that day.

Our HELOC product cannot be accessed by a credit card. Does the 5 pm cut off time apply?

Has this been printed in the Federal Register as of yet?

There seems to be 3 different sections on pmts. One applies to all payments where the reasonable cut-off time for mailed pmts is 5:00 on the pmt due date.

Then there is a rule for in-person cr card pmts where the cut off time cannot be earlier than the close of business.

Finally, for all pmts - if the bank doesn't accept pmts by mail on the due date, you have to treat the pmt as received timely on the next business day.

226.10(b)(2)(ii)

Setting reasonable cut-off times for payments to be received by mail, by electronic means, by telephone, and in person (except as provided in paragraph (b)(3) of this section), provided that such cut-off times shall be no earlier than 5 p.m. on the payment due date at the location specified by the creditor for the receipt of such payments;

B 3 discusses in person payments on credit card accounts.

So we disclose it as Reg Z states - "All payments must be made in U.S. dollars and must be received by us consistent with any payment instructions provided on or with your periodic billing statement. If a payment is made consistent with those instructions but received after 5:00 PM Central Standard Time on a business day, we will apply your payment to your Credit Line on the next business day." We close at 4:00 M-Th. But there is no reference that we can make as to accepting the payment at the close of the business day or no later than 5:00 PM. A customer states that they were at the office at 4:45 but since they couldn't get in they put it in the night depository and demands we credit their payment the day he said he put it there.

This is so confusing? We used to have verbiage stating that a payment would be credited if received by the time the office closed or 5:00 P.M. at the latest and that anything after 5:00 would be credited the next business day. Why can't they let us continue that instead of telling us we can't have a time before 5:00.

We currently list the payment cut off in our HELOC credit agreement and on the HELOC payment statement. Two questions:

1. Starting on February 22 we're going to be changing the date on the new notes, but do we need to send the customes a "Change of Terms Notice" in their monthly statement regarding the new time for payments?

2. Does the payment time need to be on the statement if the credit agreemet states the time?

bump

We have a 4:00 cut-off time, so we called our regulator (Fed) and their interpretation was that the act was intended to protect the consumer (who assumes that if they made their payment on a certain DATE) so we must credit the payment as of that date. We also disclose the full paragraph about conforming payments to all of our customers, but for open-ended credit under Reg Z CARD Act, we will now be backdating transactions... at least until we hear otherwise or the powers that be decide that all Reg Z loans (or all loans in general) must comply with a cut-off time no earlier than 5:00.