ALEXANDRIA, Va.-NCUA Associate General Counsel Sheila Albin wrote in a recent legal opinion letter that federal credit unions may adopt overdraft policies allowing for different coverage levels for different members. She said the agency had no legal problems with such a program, so long as the credit union's policy caps the total dollar amount consistent with the credit union's ability to absorb losses; sets a time limit not to exceed 45 days for a member to deposit funds or obtain a loan to cover the overdrafts; limits the dollar amount of overdrafts per member; and establishes a fee and interest rate, if any, for honoring overdrafts. However, Albin did warn that the policy could raise issues with the Equal Credit Opportunity Act and Regulation B, which implements the ECOA.
Varying Overdraft Coverage Permissible, but Beware of ECOA
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