Skip to content
BOL Conferences Top Gun 23
Thread Options
#2138756 - 07/19/17 03:52 PM Credit Card product change
Bec Offline
Diamond Poster
Bec
Joined: Jul 2010
Posts: 1,114
The Great White North
We have credit card product called a student first. When the cardholder turns to the ripe old age of 24, the intent is to then change them from a student credit card into our regular card account program. In many ways, this is a lateral move. Currently, our card agreement does not state that at age 24 they will be moved out of this product. So, my question, would we be able to move a person from student card to regular card as long as we give a 30 day notification? Or might it be a 45 day advance notification? Or could we even get away with just sending our cardholder a letter, say 10 days before we change it, as a courtesy?
_________________________
Go Packers

Return to Top
Lending Compliance
#2138775 - 07/19/17 05:02 PM Re: Credit Card product change Bec
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 80,325
Galveston, TX
How do you comply with Regulation B and the age discrimination issues based on a 24 year old cut-off? Credit product differentiation is limited to age 62.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2138907 - 07/20/17 02:52 PM Re: Credit Card product change Bec
Bec Offline
Diamond Poster
Bec
Joined: Jul 2010
Posts: 1,114
The Great White North
You know, I never really considered that piece of it.
We aren't denying them credit though, we are just moving them over to a different situation, does that make a difference?
_________________________
Go Packers

Return to Top
#2138938 - 07/20/17 04:05 PM Re: Credit Card product change Bec
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 80,325
Galveston, TX
we are just moving them over to a different situation

What does that mean??
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2139079 - 07/21/17 03:42 PM Re: Credit Card product change Bec
Bec Offline
Diamond Poster
Bec
Joined: Jul 2010
Posts: 1,114
The Great White North
We are moving from one product to another, the products themselves are basically the same, in fact, the product that they will be moved into is actually better. So there isn't a denial, just a product change.
_________________________
Go Packers

Return to Top
#2139087 - 07/21/17 03:54 PM Re: Credit Card product change Bec
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 80,325
Galveston, TX
Actually better? So you place students in a credit card product if they are under 24 that has higher fees or other credit features than your other product? You need to specifically define what you are referring too, otherwise it sounds like predatory lending and age discrimination. You cannot vary loan products based on any age other than for someone 62 or older.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2139089 - 07/21/17 04:03 PM Re: Credit Card product change Bec
Bec Offline
Diamond Poster
Bec
Joined: Jul 2010
Posts: 1,114
The Great White North
Ugh, I hope I am not indicting myself here. Will have to look into this. The student credit card has an introductory interest free period and then a similar, but slightly higher interest rate when the introductory period is over.
_________________________
Go Packers

Return to Top
#2139092 - 07/21/17 04:12 PM Re: Credit Card product change Bec
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 80,325
Galveston, TX
Can I ask a couple of questions.

If I am a 19 year old student and I apply for a credit card, do I get a choice between the two cards?

If I am a 25 year old student, can I get the card with the introductory interest free period? If the answer is no, then the determining factor is solely that I am 25 and not 24, which is age discrimination.

Automatically switching them to a lower rate card at 24 years old is still going to be problematic in my opinion.

I sure would be interested in other's opinions.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2139093 - 07/21/17 04:21 PM Re: Credit Card product change Bec
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,016
Bloomington, IN
The student credit card has an introductory interest free period and then a similar, but slightly higher interest rate when the introductory period is over.

So the terms of the card is based on age and when they reach age 24 they get better terms. That is a direct violation of the Reg. IMO.

Paragraph 6(b)(2)

1. Favoring the elderly. Any system of evaluating creditworthiness may favor a credit applicant who is age 62 or older. A credit program that offers more favorable credit terms to applicants age 62 or older is also permissible; a program that offers more favorable credit terms to applicants at an age lower than 62 is permissible only if it meets the special-purpose credit requirements of ยง1002.8.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2139101 - 07/21/17 05:10 PM Re: Credit Card product change Bec
Bec Offline
Diamond Poster
Bec
Joined: Jul 2010
Posts: 1,114
The Great White North
Randy the answer to your questions would be Yes and then No.
This is definitely a problem.
Dan, thank you for the cite.
_________________________
Go Packers

Return to Top

Moderator:  Andy_Z