WASHINGTON (5/18/09)--In this month's Compliance Challenge, a credit union asks if it can eliminate mailing paper statements to reduce costs. But does this affect statements for open-end loans such as credit card accounts and home equity lines of credit (HELOCs)?
The credit union only has to provide a periodic statement for a credit card, HELOC, or other open-end account if a finance charge is imposed during the billing cycle or if a credit or debit balance exists of more than $1, according to the Credit Union National Association.
If there is no activity, no balance, no finance charge, or no credit or debit balance exceeding $1, then no periodic statement would be required for that particular account, according to Regulation Z, Section 226.5 (b)(2).
However, since many credit unions provide a periodic statement that includes share account activity and Reg. E transactions in addition to loan balances, they will provide a periodic statement anyway even if a particular loan balance meets the above criteria and no statement would be required for that particular open-end loan. Otherwise, the statement could indicate a zero balance for the loan or not include the loan information at all.
A periodic statement need not be sent for an account if it is considered as uncollectible by the credit union, or if delinquency collection proceedings have been instituted, or if furnishing the statement would violate federal law.
courtesy of cuna.org