Fair Disclosure: Reading the Fine Print
You’ve heard that you should always read the fine print, but when you do, are you confident you understand what you’re reading? If you’re not sure about the content for the disclosure details, you should feel free to ask your financial adviser or a credit union associate to explain it to you.
In the meantime, here are some basic facts you should know.
By law, financial institutions are required to provide disclosures that detail all material facts relevant to a transaction. Reading them may enable you to make more informed decisions, as well as protect yourself and your finances in the future.
They are considered legal documents, and as such serve to protect the credit union as well. You should read them thoroughly when you open an account at any credit union. Make sure you understand them before signing.
As noted on the National Credit Union Association website, following are some sections in a disclosure document when you open an account through a credit union:
- Membership or account agreement
- Par value for one share (credit union)
- Fee schedule
- Electronic funds transfer policy
- Funds availability policy
- Overdraft protection policy and your right to opt-in/out
- Pledge of deposits in share accounts for any obligations owed the bank or credit union
- Explanation of dividends, including frequency, minimum balance requirements, etc. (credit union)
- Information on accounts with joint owners
- Certificate of Deposits (CDs) or Share Certificates disclosure, including early withdrawal penalties
For loans and other credit transactions, the disclosure documents may include annual percentage rate, terms, grace period, fees, cross-collateralization clause, and property insurance requirements and collateral protection insurance.
Also of note is that the Equal Credit Opportunity Act applies to credit unions. This act requires credit be made available to members without regard to sex, marital status, race, national origin, age, or any other prohibited basis.