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Regulation Z states that when there is a credit balance, the creditor shall attempt to refund within six months. If there are subsequent purchases or transactions, may the creditor "restart" the clock?

Section 1026.11(a)(3) of Regulation Z states that when there is a credit balance in excess of $1, the creditor shall attempt to refund any part of the credit balance remaining within six months. If there are subsequent purchases or transactions, may the creditor "restart" the clock? For example, if a payment received on June 8 results in a $750 credit balance and there is a $200 purchase made on June 15, does the six-month timeframe start from the 8th or the 15th? If the 8th is correct, must the creditor refund the amount at that time (e.g., $750 in the example)?

The timing starts from the earlier date. See comment 2 to §1026.11(a) that states "Amount of refund. The phrase… any part of the credit balance remaining in the account in §1026.11(a)(3) mean[s] the amount of the credit balance at the time the creditor is required to make the refund.” [Emphasis added.] This means that, in the example provided, the six-month timeframe starts from June 8. As to the amount of the refund, the comment continues, "The creditor may take into consideration intervening purchases or other debits to the consumer's account (including those that have not yet been reflected on a periodic statement) that decrease or eliminate the credit balance." Therefore, when the creditor issues the refund it need only refund the amount of the credit at the time the refund is issued (e.g., $550). (September 2020)

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