What is multi-featured open-end credit?
Under an MFOE plan, the credit union has a single lending contract with a member, creating a sign-once, borrow-for-life opportunity. The plan has multiple sub-accounts with different program features and rate structures. Some features may be used repeatedly, like an overdraft line, while others might be used infrequently, such as a credit line secured by collateral. Here’s how open-end credit is defined in Regulation Z [Section 226.2(a)(20)]: • Creditor reasonably contemplates repeated transactions • Creditor may impose a finance charge from time to time on an outstanding unpaid balance • The amount of the credit may be extended to the consumer during the time of the plan (up to any limit set by the creditor) and is generally made available to the extent that any outstanding balance is paid.
