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#1339805 - 02/08/10 10:08 PM
Reasonable Cut-Off Time for Crediting of Payments
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Diamond Poster
Joined: Nov 2000
Posts: 1,820
Southern California
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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.
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Dolly Nugent CRCM Opinions expressed are my own.
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#1339826 - 02/08/10 10:21 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
Dolly Nugent
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Diamond Poster
Joined: Nov 2000
Posts: 1,820
Southern California
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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.
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Dolly Nugent CRCM Opinions expressed are my own.
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#1339895 - 02/08/10 11:38 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
Dolly Nugent
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Power Poster
Joined: Aug 2002
Posts: 3,094
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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.
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#1340224 - 02/09/10 06:06 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
lucyc
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Joined: Jul 2007
Posts: 1,074
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#1340451 - 02/09/10 08:56 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
lucyc
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Joined: Jul 2007
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#1340957 - 02/10/10 04:34 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
lucyc
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100 Club
Joined: Feb 2010
Posts: 121
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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)
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#1341916 - 02/11/10 05:25 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
lucyc
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100 Club
Joined: Feb 2010
Posts: 121
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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.
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#1343815 - 02/16/10 05:13 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
Sisyphus
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Diamond Poster
Joined: Jul 2007
Posts: 1,074
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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?
Last edited by lvc; 02/16/10 05:14 PM.
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#1345467 - 02/18/10 06:13 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
Dolly Nugent
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100 Club
Joined: Aug 2002
Posts: 149
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Our HELOC product cannot be accessed by a credit card. Does the 5 pm cut off time apply?
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#1345977 - 02/19/10 03:03 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
Irishguy
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Power Poster
Joined: Aug 2002
Posts: 3,094
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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.
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Opinions are my own and not of my employer.
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#1346447 - 02/19/10 08:33 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
ahou
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Gold Star
Joined: Feb 2002
Posts: 319
NJ
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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?
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#1347910 - 02/23/10 10:00 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
Compliance Buzz
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Gold Star
Joined: Feb 2002
Posts: 319
NJ
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bump
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My opinion is free: sometimes you get what you pay for; sometimes you get lucky.
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#1353098 - 03/05/10 04:24 PM
Re: Reasonable Cut-Off Time for Crediting of Payments
lucyc
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Gold Star
Joined: Nov 2004
Posts: 313
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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;
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.
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