Why are you changing my loan payment due date?

Gene will return next time with a post in his spending plan series.

I am Tisha Oehmen, Chief Operations Officer here at Rogue Federal Credit Union. Gene asked me to answer a question we've been hearing a lot, "Why are you changing my loan payment due date?" It's a good question, but the answer might take a little explaining—so please, bear with me.

The first thing you need to know is that there was a piece of groundbreaking legislation passed this year called the Credit Card Accountability Responsibility and Disclosure Act of 2009. Its whole purpose is to help consumers take control of their finances and to stop the abusive tactics many credit card companies employed. It’s a well intentioned law that should help to make a positive difference for the average consumer. The good news is that your credit card at Rogue Credit Union already complies with all the new requirements from this regulation. However; (and there’s always a “however”) when the Act was being drafted, they expanded it from just applying to credit cards, to all open-end loans.

So what’s the difference you ask? An open-end loan is simply any loan in which a borrower may add to the principal without renegotiating the terms of the loan or apply for additional loans once a master application has been signed. That’s different than a closed-end loan, which is just what it sounds like – a loan that ends at a predetermined point in the future and the paperwork you sign is for only the one loan. You’ve seen these kinds of loans from banks on your mortgages and some automobile loans.

The sticky part comes because at credit unions in general, and ours in particular, we used to do most of our lending as open-ended. This meant you signed one master application, and then an advance voucher for any new loans. These open-end loans included car loans, boat loans, RV loans, and other installment-type loans.

Since the provisions of The Credit Card Act apply to all open-end loans, they apply to the majority of the loans at Rogue. One of the provisions of The Credit Card Act is that we provide you a billing notice at least 21 days in advance of your payment.

If your payment happens to be on the 28th of the month, you got lucky, because your month-end statement will provide you the appropriate billing notice. However, if your payment is due before the 28th of the month – we have to send you either a separate billing notice or we had to change your due date to be the 28th of the month.

Rogue has taken a blended approach to this predicament.

• For loans that will continue to be offered as an open-end product (lines of credit and home equities), we’re changing due dates to be on the 28th as of your September payment, so that your regular monthly statement will provide the appropriate disclosure. You can still make your payments on any day before the due date without any penalty – and we won’t be changing your automatic payment date, unless you’d like us to.


• For open-end installment-type loans (autos, boats, RVs, etc), we will send you the appropriate billing notice 21 days in advance of your payment due date. If you’d like to not receive the billing notice, all you have to do is stop by the credit union and sign a quick one page conversion document that will transfer your loan to a closed-end loan. The terms of your loan will be otherwise unchanged and it should take you less than 5 minutes from start to finish. Once you’ve signed the document, we’ll stop sending you billing notices!

So there you have it, over 600 words later…the answer to the question.

• Q: “Why are you changing my loan payment due date?”
• A: Because it’s an open-end loan and the Credit Card Accountability Responsibility and Disclosure Act of 2009 requires it.