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
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.
About the ICFE:
The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation). The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely.
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, which is updated annually. The ICFE 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 was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (studentdebthelp.org). CASDRAP disbanded in 2010, shortly after the web site project was completed. In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) web site and is now responsible for its content and operation.
The ICFE is also an on-line help for consumers who spend too much. ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.
Visit the ICFE's other web sites at: www.financial-education-icfe.org and studentdebthelp.org. Both sites helps consumers and students 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 how to teach children about money. Other ICFE services include: Ask Mr. G, a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.