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WASHINGTON (02/21/05) - Federal
regulators, including NCUA, issued new guidelines Friday
on bounce protection programs that include best practices
for marketing and disclosures and monitoring for safety
and soundness.
The regulators' guidelines include: prominent disclosure
of fees; avoid encouraging poor account management in
order to boost overdraft fees; and providing a clear
explanation of the voluntary nature for the increasingly
popular programs, adopted by hundreds of credit unions
over the past two years.
But a leading consumer advocacy group, the Center for
Responsible Lending, founded by Self-Help CU, criticized
the new guidelines as toothless because the guidelines are
voluntary, and they do not require lenders to disclose the
annual percentage rate on bounce fees, some of which can
amount to 1,000% APR. The group cited a $20-to-$35 bounce
fee applied to an $80 overdraft, which can exceed a 1,400%
rate when a customer takes seven days to pay.
The consumer group has been lobbying federal regulators to
disclose bounce fees as loans, which would require that
the annual rates be disclosed the same way lenders are
required to disclose loan rates. The group urged that
regulators take up more stringent guidelines and adopt
regulations in order to enforce them.
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About the ICFE:
About the
ICFE:
The Institute of Consumer Financial Education (ICFE), founded in 1982 by the
late Loren Dunton (creator of the “certified financial planner” (CFP)
designation) and it is dedicated to helping consumers of all ages to improve
their spending, increase savings and use credit more wisely. The ICFE trains and
certifies Personal Finance Instructors for its own curriculum. It also trains
and certifies Credit Report Reviewers and Identity Theft Prevention Specialists.
The ICFE is an award winning, nonprofit, consumer education organization that
has helped millions of people through its education programs and resources. It
publishes the Do-It-Yourself Credit File correction Guide, now in its 16th
printing and has distributed over one million “Credit/Debit Card Warning Labels”
and “Credit/Debit Card Sleeves” world wide.
The ICFE became an official partner with the Department of Defense/Financial
Readiness Campaign in June of 2004.
The ICFE is also a partner in the national Jump$tart Coalition for Financial
Literacy and the California Jump$tart chapter. The ICFE staff is also active
with San Diego Saves, an offshoot of America Saves, and the California Student
Debt Resource Awareness Project (CASDRAP) (studentdebthelp.org).
The ICFE’s on-line help for consumers who spend too much was featured in PARADE
Magazine in the Intelligence Report section. The money helps and tips are from
“The Money Instruction Book,” a course in personal finance, positioned to become
among the premier programs in the new bankruptcy and debtor education
initiatives.
The ICFE Web site at:
http://www.icfe.info helps consumers with mending spending, learning about
the proper use of credit, budget and expense guidelines, how to set up and
implement a spending-plan and also how to access financial education courses and
videos and how to teach children about money. Other ICFE services include a free
eNewsletter, and an online resource center of financial education learning
tools, including videos, books, software and personal finance courses.
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