CUNA member credit unions can now access an interactive spreadsheet designed to help them determine which credit card fees are considered “reasonable and bona fide” under the Military Lending Act (MLA). Credit card provisions in the MLA become effective Tuesday October 3rd.
“CUNA developed the spreadsheet in response to comments from credit unions of various asset sizes indicating that a spreadsheet like the one CUNA provided, would be very helpful for complying with the MLA requirements regarding reasonable and bona fide fee comparisons,” said CUNA Chief Compliance Officer Jared Ihrig. “The interactive Excel spreadsheet is designed to significantly reduce the time required for credit unions to determine whether credit card fees are considered reasonable and bona fide under the MLA regulation.”
The Department of Defense finalized changes to the MLA in July 2015, expanding the types of loans covered by the rule and placing limitations on terms of consumer credit extended to servicemembers and their families.
Under the safe harbor from the MLA rule, credit unions can exclude a bona fide credit card fee from the military annual percentage rate (MAPR) if the fee is considered “reasonable.”
This means the fee must be less than or equal to the average fee for the safe or similar product charged by 5 separate card issuers that each have at least $3 billion in outstanding credit card balances at any time during the 3-year period prior to the determination of the average.
Currently, approximately 20 large card issuers that meet the $3 Billion requirement.
Charges that can be excluded generally include charges such as cash advance fees, foreign transaction fees, balance transfer fees, transaction fees for purchases and minimum interest charges.
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.
Additional details on the MLA regulation, and links to the spreadsheet and instructions, can be found on CUNA's Compliance Community under the Compliance Resources tab and under the Military Lending Act in CUNA’s E-Guide under the Resources tab.