TMG Credit Union Clients Eliminate Overlimit Credit Card Fees
(Des Moines, Iowa – March 24, 2010) – Due to a new regulation permitting the assessment of overlimit fees only to those cardholders who have agreed to the fees, card portfolio managers at 95 percent of TMG’s card-issuing credit unions have discontinued the authorization of overlimit credit card transactions.
Those clients continuing to allow overlimit authorizations will do so without assessing a fee.
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.
“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.”
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.”
In addition to managing transactions for and communication with two cardholder groups, credit unions offering fee-based overlimit services have been asked to present their fee models to the Federal Reserve Board in order to weigh in on the Fed’s final rules regarding the reasonability of fees.
“The complexities of defendable fee calculations makes fee-based opt-in program compliance insurmountable for many card-issuing credit unions,” said Petty.
About TMG
TMG is a wholly-owned subsidiary of the Affiliates Management Company, which is owned by Iowa credit unions and their members. As a financial and credit union service organization (CUSO), TMG is dedicated to providing innovative and flexible card processing and payment solutions to credit unions and financial institutions across North America. TMG’s core products include credit, debit, ATM and a variety of prepaid solutions, as well as online reporting, item processing, ACH and ALM services. TMG’s prepaid card products are branded ATIRA. For more information, visit www.TheMembersGroup.com.
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For More Information:
Kelly Moore (for TMG)
515.720.9670
