CUNA has updated its Military Lending Act (MLA) credit card fee comparison spreadsheet for the third quarter, updated as of September 2018. The updated resource can be found in the CUNA Compliance Community’s “Compliance Resources” tab, and under the “Resources” tab in CUNA’s MLA e-Guide.
This update is necessary because, under a safe harbor in the MLA rule, a credit union may exclude a bona fide credit card fee from the military annual percentage rate (MAPR) if the fee is considered “reasonable.”
This means that the fee must be less than or equal to the average fee for the same or similar product charged by five separate card issuers that each have at least $3 billion in outstanding credit card balances at any time during the three-year period preceding the time the average is determined.
Currently, there are approximately 20 large card issuers that meet this requirement and only one of those is a credit union.
Together these card issuers have about 260 card agreements in the CFPB’s Card Agreement Database, but since many appear to be Private Label cards, only around 85 of the agreements seem to be useful for MLA purposes.
The exclusion generally applies to finance charges under Regulation Z such as cash advance fees, foreign transaction fees, balance transfer fees and transaction fees for purchases and minimum interest charges. Other charges, which are not finance charges under Regulation Z, such as a late fee or an over-limit fee are not included in the calculation of the MAPR, so the exclusion does not apply.
The exclusion does not apply to fees or premiums for credit insurance, fees for a debt cancellation contract, fees for a debt suspension agreement, or to fees for a credit related ancillary product. Those fees must be included in the calculation of the MAPR.