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#1359869 - 03/18/10 03:52 PM Payment cut-off before 5:00
Reed Offline
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How is everyone with cut-off times before 5:00 dealing with the new Reg Z requirements for crediting of payments?

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#1360569 - 03/19/10 01:27 PM Re: Payment cut-off before 5:00 Reed
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Doesn't anyone else have 3:00 cut-off?

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#1360589 - 03/19/10 01:41 PM Re: Payment cut-off before 5:00 Reed
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Our cut-off for in-person payments is 3PM....the close of our business day.
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#1360596 - 03/19/10 01:46 PM Re: Payment cut-off before 5:00 swiggles
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You may cut off at your normal close of business for the bank.

"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 ยง 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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#1360752 - 03/19/10 03:10 PM Re: Payment cut-off before 5:00 MyBrainHurts
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In the section-by-section analysis (on page 7708 of the FR) it states:

"While the Board's January 2009 Rule left open the possibility that in some circumstances, cut-off times earlier than 5 p.m. might be considered reasonable, amended TILA Section 164 prohibits cut-off times earlier than 5 p.m. on the due date in all circumstances.... Notwithstanding the general rule in proposed 226.10(b)(2)(ii), card issuers...may not impose a cut-off time earlier than the close of business of that office or branch, even if the office or branch closes later than 5 p.m. The Board notes that this rule refers only to payments made in person at the branch office. Payments made by other means...are subject to the general rule prohibiting cut-off times prior to 5 p.m. regardless of when a financial institution's branches or offices close.... The Board notes that the Credit Card Act applies the 5 p.m. cut-off time requirement to all open-end credit plans, including open-end (home-secured) credit."

To paraphrase the citation KFitz gave: A bank doesn't have to accept in person payments after hours, but it does have to accept payments made through other means until 5 p.m. because the after hours exception only applies to in-person payments.

Also, am I wrong to think that after reading the analysis "close of business" is to be taken literally, as in closing the doors?

I'm thinking that way because in the example given in the discussion of 226.10(3) it says if a bank closes later than 5 p.m. it must still accept payments until close of business.


Sorry that was so long. I'm just trying to understand all this stuff.
Last edited by Spin; 03/19/10 06:18 PM. Reason: clarify
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#1360775 - 03/19/10 03:21 PM Re: Payment cut-off before 5:00 Reed
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Also, 226.10(b)(2) applies to open-end credit plans, including open-end (home-secured) credit, but 226.10(b)(3) only applies to credit card accounts under an open-end (not home-secured)consumer credit plan.

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#1360783 - 03/19/10 03:25 PM Re: Payment cut-off before 5:00 Reed
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The exception to the 5pm is for:
*in-person pmts
*at a branch or office of the bank
*for cr cards.

Section 226.10(b)(3) allows the cutoff to be as of the close of business.
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#1360789 - 03/19/10 03:30 PM Re: Payment cut-off before 5:00 ahou
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But the exception is in 226.10(b)(3), which only applies to credit cards and the requirement in 226.10(b)(2)alson applies to HELOCs

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#1360912 - 03/19/10 04:41 PM Re: Payment cut-off before 5:00 Reed
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We are giving the customer a Cediting of Payments Disclosure at loan closing. This basically says how, when, where, and at what time payments must be received.

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#1361058 - 03/19/10 06:14 PM Re: Payment cut-off before 5:00 Here4Life
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ok, for an IN PERSON CREDIT CARD ACCOUNT PAYMENT a bank can have a cut-off of close of business.

For all types of payments made to other open-end credit (including HELOCs) and credit card account payments not recieved in person, the cut-off time can't be earlier than 5 p.m.

Of that I am certain.

My questions are: How are supposed to do this? and Do they mean close of business as in our cut-off time for deposits or literally when we close the doors for the day?


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#1361782 - 03/22/10 05:46 PM Re: Payment cut-off before 5:00 Reed
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This is from the FRB's "What You Need to Know: New Credit Card Rules" publication for consumers:

"Standard payment dates and times. Your credit card company must mail or deliver your credit card bill at least 21 days before your payment is due. In addition

o Your due date should be the same date each month (for example, your payment is always due on the 15th or always due on the last day of the month).

o The payment cut-off time cannot be earlier than 5 p.m. on the due date.

o If your payment due date is on a weekend or holiday (when the company does not process payments), you will have until the following business day to pay. (For example, if the due date is Sunday the 15th, your payment will be on time if it is received by Monday the 16th before 5 p.m.)."

It seems pretty clear to me that banks can't have cut-off times before 5:00 for most types of payments. Does anyone agree, or am I missing something?

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#1362669 - 03/23/10 09:15 PM Re: Payment cut-off before 5:00 Reed
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We changed our disclosure to read 5 p.m.

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#1363042 - 03/24/10 04:22 PM Re: Payment cut-off before 5:00 Combustible
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Thanks, amicomply. How did the change affect your FI operationally? Is your proof department open later?

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#1364200 - 03/25/10 07:23 PM Re: Payment cut-off before 5:00 Reed
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We also changed our P&P to credit open-ended payments as of the date the payment was made. While our end of day cut-off time is 4:00, we now flag these transactions at the teller line and back-date any open-end payments made between 4:00 and close of business so that the consumer receives credit as of the DATE they made the payment. While the regulation only requires we handle items received between 4-5PM, we chose to include everything taken after end of business day and close of business.

We've changed our disclosures for all new customers to accurately reflect the cut-off time, but do we also need to give notice of these extended hours to existing customers since it's to the customer's benefit? What's the timeline required - I didn't see it in RegZ, could someone point me to the correct reference?? Thanks!

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#1364536 - 03/26/10 01:28 PM Re: Payment cut-off before 5:00 trout22
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trout22, From my reading of the regulation I'm thinking that unless you specify a 5:00 cut-off time, your assumed cut-off is the time the bank closes (see OSC 226.10(b)4 on page 7887).

I'm also not seeing anything in the regulation about notification requirements, but I'm thinking either a prominent notice in the lobby, website, and phone banking or a statement message or statement stuffer for existing customers would make sense--Otherwise, how can you say you "specified" an earlier than closing cut-off?

Just a note, from reading 226.10(b)(3)and the analysis on page 7708, I don't think you can even have a 5:00 cut-off for in-person payments on credit card accounts if the bank is open later than 5:00. The example in the reg states that if a bank closes earlier than 5:00 the cut-off can be when they close. The example in the analysis is opposite--if a bank is open later than 5:00 it has to accept in person credit card account payments until closing.


P.S. I got an email from our state bankers association yesterday and their take is that a bank can't have a cut-off time earlier than 5:00 and this doen't just apply to credit cards.

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#1364908 - 03/26/10 06:03 PM Re: Payment cut-off before 5:00 Reed
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We are going to stay with our 3PM cut-off time for in person. Our customers are notified of this. Mail processed next day gets prior day's posting. I'll wait for examiner criticism.
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#1365261 - 03/29/10 01:04 PM Re: Payment cut-off before 5:00 Reed
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Originally Posted By: Spin
trout22, From my reading of the regulation I'm thinking that unless you specify a 5:00 cut-off time, your assumed cut-off is the time the bank closes (see OSC 226.10(b)4 on page 7887).

I'm also not seeing anything in the regulation about notification requirements, but I'm thinking either a prominent notice in the lobby, website, and phone banking or a statement message or statement stuffer for existing customers would make sense--Otherwise, how can you say you "specified" an earlier than closing cut-off?

Just a note, from reading 226.10(b)(3)and the analysis on page 7708, I don't think you can even have a 5:00 cut-off for in-person payments on credit card accounts if the bank is open later than 5:00. The example in the reg states that if a bank closes earlier than 5:00 the cut-off can be when they close. The example in the analysis is opposite--if a bank is open later than 5:00 it has to accept in person credit card account payments until closing.


P.S. I got an email from our state bankers association yesterday and their take is that a bank can't have a cut-off time earlier than 5:00 and this doen't just apply to credit cards.


Right, we are Fed regulated and confirmed the same with them as well back in early Feb. We are operating on the principle that you may not have a cut-off time earlier than 5:00 on any open-ended credit. Maybe I wasn't clear in the previous post... While our end of day will remain at 4:00, we have extended our 'cut-off' times on all Reg Z open-ended credit to now incorporate the full business day, so up until 6:00 when the bank closes we will process open-end payments on the same date in order to be in compliance with this regulation.

My problem is, up until February, we disclosed that our cut-off time for all loan payments was 4:00 (at EOD). It was standard verbiage in our loan docs. So since we've expanded our cut-off time - or basically removed a cut-off time for this particular type of payment, and it's in the customer's benefit, would we need to disclose this change to all customers? It's a cut-off time now 2 hours LATER than what their docs specified... If so, I wasn't able to find this requirement in Reg Z (should I look elsewhere?) so I'm unsure of the timeline and exactly what is required.

A statement message would be my preferred method, and our process to date, but not all of our LOC customers receive statements when the account has no activity, so I'm worried that a portion of the customer's affected would not receive notice if I go this route. Before I do a mass mailing, just wanted to make sure it was required...

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#1365318 - 03/29/10 02:16 PM Re: Payment cut-off before 5:00 trout22
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trout22, IMHO, you only have to notify customers of the later cut-off time if you are open later than 5:00 but want to have 5:00 as your cut off time. Since you are posting payments up until closing, my opinion is that you are in compliance.

What are you doing about 226.10(d)[payments on non-business days]? That one has me stumped.

And how are you segregating open-end credit payments from the rest of the days work?

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#1365476 - 03/29/10 04:58 PM Re: Payment cut-off before 5:00 Reed
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Originally Posted By: Spin
trout22, IMHO, you only have to notify customers of the later cut-off time if you are open later than 5:00 but want to have 5:00 as your cut off time. Since you are posting payments up until closing, my opinion is that you are in compliance.

What are you doing about 226.10(d)[payments on non-business days]? That one has me stumped.

And how are you segregating open-end credit payments from the rest of the days work?


226.10(d) - My understanding is that if you post your mail on the next business day you are open, and if you have any sort of a grace period, you are OK. It just says you can't treat it as late when processed the next business day. So if we receive mail on a non-banking day (Saturday or Federal Holiday) we'd post it the next chance we get. Worse case scenario is that the payment would be due on a Sunday, we'd have a Monday holiday, then it would post on Tuesday - which is still well within our grace period before we'd consider it as 'late' so we don't feel like we have any changes to procedures to make to comply. Please advise if anyone feels differently!

To answer your last question - manually sick

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#1456259 - 10/18/10 05:10 PM Re: Payment cut-off before 5:00 trout22
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I have been so confused by this since it came out. UGH! Our bank doors are open until 6:00 M - F and our deposit cut-off time is 3:00. We recently implemented a branch capture program and once the bugs are worked out we are considering moving our deposit cut-off time until 5:00 - which would help this loan payment cut-off problem considerably.

However, until then, our procedures are to credit any payments received between 3 and 6 to the loan as of the actual date received (by running the check, cash-in, etc through a GL suspense account and crediting the loan payment as a block entry so it can be credited same day). that's all fine and dandy but I just completed some monitoring and of the 16 consumer loans payments received in a five week period between 3 and 6, half of them did not get credited for the date received. They were allowed to run through on the next days work. BIG PROBLEM!

I am now working on corrective action by reversing these payments and getting them posted as of the date received (so the interest calcluaton is accurate). I haven't seen much in the way of instructions for fixing the ones that are wrong. My questions are these:

1) is there room for tolerance here? possibly a diminimus rule where I wouldn't have to fix them?

2) Since the problem is clearly a pattern or practice do you think I should ge back to February to identify and fix any of the accounts that are wrong? I'm guessing the amount of adjustmant is rather small - just interest on the principal portion of the payment and possibly a late charge.

3) can I just do an adjustment to the interest and/or refund any late charge or is it better to reverse the payment that was posted on the wrong date and credit it for the right date - in essence, this will make the small interest adjustment.

Maybe I am over thinking this...as if I didn't have other things to be working on....

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#1456535 - 10/18/10 09:18 PM Re: Payment cut-off before 5:00 travelgirl
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I could be wrong, but where I work, we are only backdating the payments on loans that are past due or if it would make them late if not backdated. Someone please tell me if we're doing it wrong also.

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