Applicability of Guidance

• This checklist should be completed for all institutions supervised by the OCC that offer credit card programs. The checklist should be used in conjunction with the related examination procedures.

• Negative responses below may indicate that management is not complying with the guidance. In such cases, further review may be necessary to determine the appropriate corrective action.

Credit Line Management

1. Does management test, analyze, and document line-assignment and line-increase criteria prior to broad implementation?

2. Does the bank offer customers multiple credit lines, such as bankcard plus store-specific private label cards and affinity relationship cards? If so, does the bank’s management information systems aggregate related exposures and does management analyze performance prior to offering additional credit lines?

Over-limit Practices

1. Are policies and controls in place regarding over-limit authorizations?

2. Does management take appropriate actions to facilitate the timely repayment of the over-limit amounts (e.g., reduce or eliminate fees, raise the minimum payment, initiate workout programs)?

3. Does MIS enable management to identify, measure, manage, and control the unique risks associated with over-limit accounts? MIS should include:

   • Over-limit volume, segmented by severity.

   • Credit performance.

   • Duration of over-limit.

Minimum Payment and Negative Amortization

1. Do minimum payment requirements ensure that the principal balance will be amortized over a reasonable period of time, consistent with the risk profile of the borrower?

2. Do minimum payment requirements cover finance charges and recurring fees assessed during the billing cycle?

Repayment Period

1. Do all workout programs provide for repayment terms that have borrowers repay their existing debt within 60 months?

2. What exceptions are allowed to the 60-month time frame? Are such exceptions clearly documented and supported by compelling evidence that less conservative terms and conditions are warranted?

1. For credit card accounts subject to settlement arrangements, are controls in place for setting the amount (dollar or percentage) to be forgiven and the requirement for the borrower to pay the remaining balance in either a lump-sum payment or over several months?

2. Is the amount of debt forgiven in a settlement arrangement classified loss and charged off immediately? If this is not done, does the bank treat such amounts forgiven in settlement arrangements as specific allowances?

1. Upon receipt of the final settlement payment, are any deficiency balances charged off within 30 days?

1. When determining appropriate loss allowances, does the bank evaluate the collectibility of accrued interest and fees on credit card accounts?

2. If the bank does not place credit card accounts on nonaccrual, does it alternatively provide loss allowances for uncollectible fees and finance charges?

3. For banks that securitize credit card receivables, does management ensure that the owned portion of accrued interest and fees, including related estimated losses, are accounted for separately from the retained interest in accrued interest and fees from securitized accounts?

1. Does management consider the loss inherent in both delinquent and nondelinquent loans?

1. Does the bank’s allowance method address the additional risk associated with chronic over-limit accounts?

1. Are accounts in workout programs segregated for performance measurement, impairment analysis, and monitoring purposes? (Multiple workout programs having different performance characteristics should be tracked separately.)

2. Is the allowance allocation on workout programs at least equal to the estimated loss in each program based on historical experience as adjusted for current conditions and trends?

1. Does the bank ensure that the total amount credited to the ALLL as recoveries on a loan is limited to the amount previously charged off against the ALLL on that loan?

1. Does the bank allow any exceptions to the FFIEC Uniform Retail Credit Classification and Account Management Policy?

   If so, what types of exceptions are allowed?

2. For exceptions granted, do the bank’s policies and procedures identify the types of exceptions allowed and the circumstances for permitting them?

3. Is the performance of accounts granted exceptions to this policy tracked and monitored?