March 1, 2000
Ms. Donna J. Chardeen
New York State Credit Union League
P.O. Box 15118
Albany, New York 12212-5118
Re: Use of Credit Cards After Termination of Membership.
Dear Ms. Chardeen:
You have asked whether individuals who terminate their membership with
a federal credit union (FCU) may continue to receive new advances of
credit on credit cards issued by the FCU. They cannot.
The Federal Credit Union Act and the Federal Credit Union Bylaws provide
that FCUs may only extend credit to members. 12 U.S.C. §1757(5);
FCU Bylaws, Art. XI, §1. When a member terminates his or
her membership in an FCU, that individual may not obtain further extensions
of credit from the FCU. Former members remain obligated to pay
any outstanding debts owed to the credit union in accordance with the
terms of their credit agreements.
We note that FCUs may issue credit cards to nonmembers under certain
circumstances. Many agreements between credit card companies and
FCUs permit members who are cardholders to extend the use of their credit
cards to nonmember agents. In these circumstances, the member
is primarily liable for all amounts advanced under the credit card issued
to a nonmember. This subject is discussed at length in the enclosed
letter from Hattie Ulan to Patricia Jones, dated April 2, 1991.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/SAA/CJL:bhs
SSIC 3700
00-0133
Enclosure
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