Federal Holiday Schedule

Also known as bank holidays, Federal Reserve holidays are calendar dates on which financial institutions are closed. Ten days out of the year, Federal Reserve banks, credit unions, and other financial institutions close for business. January 1st, or New Year's Day; the third Thursday in January, which is Martin Luther King, Jr. Day; Presidents' Day, which falls on the second Monday in February; the last Monday in May, celebrated as Memorial Day; the 4th of July; and Labor Day, typically the first Monday in September are all Federal Reserve holidays. Other dates include Columbus Day, observed on the second Monday in October; Veterans Day on November 11th; Thanksgiving Day on the last Thursday in November; and Christmas Day, always on December 25th. While Federal employees and the general public enjoy taking time off, bank holidays sometimes coincide with installment payment due dates. Credit card account holders, Federal and state taxpayers, and debtors with installment payments may all run the risk of incurring late charges and additional interest when due dates fall on a day when banks are closed.

The Federal holiday schedule is established each year through the Federal Reserve Bank, known as the Fed. As the primary economic watchdog of the United States, the Fed controls the purse strings of America by monitoring the flow of cash in the nation's economy. Under the direction of the U.S. Congress, the Fed has the power to raise or lower interest rates to slow or stimulate consumer buying power, thereby controlling inflation or recession. In addition to being the nation's financial regulatory agency, the Fed also establishes fiscal regulations which protect borrowers from unfair lending practices. The Truth in Lending law makes creditors, banks, and other lending institutions tow the line when it comes to charging borrowers fair interest rates and implementing fair policies for payment due dates, collection processes, grace periods and interest penalties. Credit card issuers have reportedly been notorious for accessing late penalties and increasing APRs (annual percentage rates) for debtor payments received on national observance dates and weekends. Since payments cannot be posted on dates banks are closed, an essentially timely payment could be assessed as late. While some unwary debtors may never notice or complain about hidden charges that magically appear on revolving charge account statements, the Fed takes this issue seriously.

Assessing penalties for payments deemed late due to Federal reserve holidays is like the proverbial butcher who puts a fat thumb on the scales to make meat weigh more. The Bible is adamant about merchants and creditors who deal falsely with unwary consumers: "A false balance is abomination to the Lord: but a just weight is His delight" (Proverbs 11:1). The twenty-second chapter of Proverbs, verses 22 and 23 also admonish: "Rob not the poor, because he is poor: neither oppress the afflicted in the gate. For the Lord will plead their cause, and spoil the soul of those that spoiled them." Because of the high cost of financing, consumers are already burdened with high interest installment payments. Unscrupulous creditors who add frivolous fees for payments declared late due to bank holidays take unfair advantage of individuals who strive to pay on time and maintain a good credit reputation.

Creditors are aware that because banks and other financial institutions are closed due to a Federal holiday schedule, payments cannot post until the next business day. Therefore, many creditors do not impose late penalties for payments posted after a due date which falls on holidays. The Fed is concerned about those unscrupulous creditors, especially credit card issuers who now can legally impose these additional fees, since no standardized regulation exists. Borrowers who repeatedly incur late fees and increased APRs because payment postings are delayed due to bank holiday due dates could realize higher monthly payments. Higher monthly payments due to excessive late charges could potentially wreak havoc with a borrower's credit worthiness. Credit reporting agencies examine not only how much a debtor pays but also how timely installment payments are made. Payments that are consistently late reflect poorly on consumer creditability. The Feds also fear that some creditors intentionally set payment due dates to fall on a Federal holiday schedule in order to collect additional late fees. The Federal Reserve Bank is seeking ways to standardize the way creditors post payments and impose regulations which would require creditors nationwide to post timely payments, which happen to fall on bank holidays and weekends, on the next business day.

The Internal Revenue Service, the largest creditor in the U.S., currently gives taxpayers a break for payment due dates that coincide with bank off days or weekends without imposing late fees. Taxpayer payments that are either postmarked on the tax due date or received on the next business day following the date banks and federal offices are closed are considered timely. The Fed suggests that other creditors consider adopting a similar standardized policy. Wise borrowers should request payment schedules from banks, credit unions and other lending institutions and inquire about policies for due dates that fall on Federal Reserve holidays and weekends. It won't hurt to get clarification in advance about payment policies which might negatively affect a borrower's credit and future financing potential. Discussions about payments received during a Federal holiday schedule are still pending before the Federal Reserve Bank. But if the Feds have their way, creditors are going to have to take a holiday from questionable payment collection policies and adhere to federally imposed lending laws.

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