Notice Required on Automatic Payment?

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Question:

We have Demand Deposit Line of credit revolving loans. We do not have any grace days. The payment comes out once per month and then a statement goes out at the end of the month. Do we need to send out a twenty-one day advance notice prior to the automatic transfer of the payment?

Answer:

If you report these loans to a credit reporting agency or charge a late charge, you must provide a statement at least twenty-one days before the scheduled payment date, according to the current wording of Regulation Z, Section 226.5(b)(2). However, Congress amended the Truth in Lending Act again to limit that requirement to credit card accounts. The revisions to Section 226.5(b)(2) that are effective 2/22/2010 change the 21-day requirement to apply it only to credit cards. Review the updated provision in BOL's ABC Soup, HERE.

First published on BankersOnline.com 1/25/10