Academic journal article ABA Banking Journal

Are Special Packages for Seniors OK?

Academic journal article ABA Banking Journal

Are Special Packages for Seniors OK?

Article excerpt

Q. My bank would like to offer a special checking account to people age 50 and over. There would be no minimum balance to open the account, but customers would need to maintain a minimum balance of $1,000 to receive interest. The account would offer free money orders; free stop payments, and free checks. Also, account holders would be eligible automatically for overdraft lines of credit. Do you see any Regulation B or Regulation DD problems with this type of account?

A. Your questions do not raise any especial Regulation DD issues, although advertisements and disclosures must be in compliance. Where you may have a problem is with Regulation B. According to the Reg. B Commentary Paragraph 202.6(b)(2):

"Favoring the elderly: Any system of evaluating creditworthiness may favor a credit applicant who is age 62 or older. A credit program that offers more favorable credit terms to applicants age 62 or older is also permissible; a program that offers more favorable credit terms to applicants at an age lower than 62 is permissible only if it meets the special-purpose credit requirements of [section] 202. …

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