Roughly 95% of credit unions that process their credit card transactions with The Members Group have stopped allowing members to go over their card's limits, the processor said. The remaining credit unions that still allow cards to be used over their limits have said they will not fee members who do so.
The decision to do so comes in response to proposed rules to be contained in the final portion of the Credit CARD Act, effective Aug. 22, the processor said.
"There's no doubt some cardholders will miss the ability to spend over their credit limits," said Sara Petty, TMG's vice president of strategic initiatives. "However, removing the temptation to overspend really makes sense for credit unions as they lead the country's efforts to return to thrift and financial responsibility."
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Citing opt-in program costs among the reasons for eliminating the overlimit authorizations, TMG clients predict several challenges in the maintenance of two cardholder groups, those opting-in and those opting-out of overlimit fees.
"To complicate matters, the two groups would be in constant flux, as cardholders maintain the ability to change their minds," said Petty. "If, for instance, a cardholder has opted in, he has the right to opt-out each time he receives a statement containing an overlimit fee."
"The complexities of defendable fee calculations makes fee-based opt-in program compliance insurmountable for many card-issuing credit unions," said Petty.
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