The merger effect: Protected balances

first_img continue reading » ShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr A couple weeks ago, we blogged on a few FAQs related to mergers. As it continues to baffle those of you out there dealing with mergers, today’s blog expands on the last FAQ – converting a credit card portfolio post-merger. For a refresher, here’s the scenario:Kenosha Credit Union merges into Point Place Federal Credit Union. Kenosha CU had a credit card plan that Point Place FCU does not want to continue administering. Point Place FCU wants to encourage members with this credit card to open a new card and transfer the balance from the old card. If it does so, must the existing balance be protected?As was discussed in the FAQ, the rules in section 1026.55 on increasing an APR apply to acquired accounts and when a balance is transferred from one card to another card at the same credit union. The commentary to section 1026.55(d) specifically mentions accounts obtained through a merger as a type of acquired account the rules apply to. If Point Place FCU wants to increase the APR as part of the balance transfer, either initially or in the future, it may do so only if one of the exceptions in section 1026.55(b) apply. The two exceptions that generally apply here – temporary rate and advance notice – both create a protected balance.last_img

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