For example, if an issuer may increase an introductory rate because the account is more than 60 days late, the issuer should describe this circumstance directly beneath the table as make a late payment. In addition, if the circumstances in which an introductory rate could be revoked are already listed elsewhere in the table, the issuer is not required to repeat the circumstances again, but may refer to those circumstances in a clear and conspicuous manner. See comment 60(b)(4)3.iii. (10) Over-the-limit fee. Disclosure of the month and year fulfills the requirement to disclose the date an application was printed. Card issuers may, therefore, omit inapplicable headings and their corresponding boxes in the table. ii. In making this disclosure, the card issuer may make such modifications as are necessary to more accurately reflect the circumstances of repayment under the account. Calculating available credit. 2. A telephone conversation between a card issuer and consumer may result in the issuance of a card as a consequence of an issuer-initiated offer to open an account for which the issuer does not require any application (that is, a prescreened telephone solicitation). (A) The first transaction occurs when a consumer contacts a merchant by telephone to purchase goods and at the same time the consumer accepts an offer to finance the purchase by establishing an open-end plan with the merchant or third-party creditor; (B) The merchant or third-party creditor permits consumers to return any goods financed under the plan and provides consumers with a sufficient time to reject the plan and return the goods free of cost after the merchant or third-party creditor has provided the written disclosures required by 1026.6; and. If an account has been closed (for example, due to inactivity, cancellation, or expiration) and then is reopened, new account-opening disclosures are required. (i) The creditor shall make the disclosures required by this subpart clearly and conspicuously. Creditors may impose costs to return subsequent purchases of merchandise under the plan, or to return merchandise purchased by other means such as a credit card issued by another creditor. How grace period disclosure is made. This section does not apply to: 1. Instituting collection proceedings. 2. In these circumstances, 1026.60(b)(5) requires the issuer to amend the above disclosure language to describe accurately the conditions on the applicability of the grace period. Creditors institute a delinquency collection proceeding by filing a court action or initiating an adjudicatory process with a third party. 1026.34 Prohibited acts or practices in connection with high-cost mortgages. We encourage you to read the NCUA's exit link policies. 1. For example, if the circumstances in which an introductory rate could be revoked are the same as the event or events that may trigger a penalty rate as described in 1026.60(b)(1)(iv)(A), the issuer may refer to the actions listed in the Penalty APR row, in describing the circumstances in which the introductory rate could be revoked. Content. Disclosures required by 1026.6 may be provided as soon as reasonably practicable after the first transaction if: 1. For home-equity plans subject to 1026.40, the terms finance charge and annual percentage rate, when required to be used with a number, must be disclosed more conspicuously than other required disclosures, except in the cases provided in 1026.5(a)(2)(ii). If an issuer charges the same foreign transaction fee for purchases and cash advances in a foreign currency, or that take place outside the United States or with a foreign merchant, the issuer may disclose this foreign transaction fee as shown in Samples G-10(B) and G-10(C). 1026.54 Limitations on the imposition of finance charges. The information about costs of the Card is accurate as of the effective date of _____. Even if that issuer subsequently increases the annual percentage rate for purchases to 15.99%, pursuant to a change-in-terms notice provided under 1026.9(c), the 12.99% is not an introductory rate. Substitution of account-opening summary table for the disclosures required by 1026.60. In that case, the card issuer also must disclose the fact that the penalty rate may vary and how the rate is determined, such as This APR may vary with the market based on the Prime Rate. In describing the penalty rate, the issuer shall not disclose in the table the amount of the margin or spread added to the current purchase rate to determine the penalty rate, such as describing that the penalty rate is determined by adding 5 percentage points to the purchase rate. 1026.39 Mortgage transfer disclosures. 1026.22 Determination of annual percentage rate. A deferred interest or similar promotional program under which the consumer is not obligated to pay interest that accrues on a balance if that balance is paid in full prior to the expiration of a specified period of time is not a grace period for purposes of 1026.5(b)(2)(ii)(B). 1601 (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. In a variable-rate account, the rate that would have applied at the end of the promotional period is a rate based on the applicable index or formula in accordance with the accuracy requirements set forth in 1026.60(c)(2) or (e)(4). Explore guides to help you plan for big financial goals, Subpart B - Open-End Credit 1026.51026.16, Subpart C - Closed-End Credit 1026.171026.24, Subpart D - Miscellaneous 1026.251026.30, Subpart E - Special Rules for Certain Home Mortgage Transactions 1026.311026.45, Subpart F - Special Rules for Private Education Loans 1026.461026.48, Subpart G - Special Rules Applicable to Credit Card Accounts and Open-End Credit Offered to College Students 1026.511026.61, Supplement I to Part 1026 - Official Interpretations, Official interpretation of 60(a)(1) Definition of Solicitation, Official interpretation of 60(a)(2) Form of Disclosures; Tabular Format, Official interpretation of 60(a)(4) Fees That Vary by State, Official interpretation of 60(a)(5) Exceptions, Official interpretation of 60(b) Required Disclosures, Official interpretation of 60(b)(1) Annual Percentage Rate, Official interpretation of 60(b)(2) Fees for Issuance or Availability, Official interpretation of 60(b)(3) Fixed Finance Charge; Minimum Interest Charge, Official interpretation of 60(b)(4) Transaction Charges, Official interpretation of 60(b)(5) Grace Period, Official interpretation of 60(b)(6) Balance Computation Method, Official interpretation of 60(b)(7) Statement on Charge Card Payments, Official interpretation of 60(b)(8) Cash Advance Fee, Official interpretation of 60(b)(9) Late Payment Fee, Official interpretation of 60(b)(10) Over-the-Limit Fee, Official interpretation of 60(b)(13) Required Insurance, Debt Cancellation or Debt Suspension Coverage, Official interpretation of 60(b)(14) Available Credit, Official interpretation of 60(b)(15) Web Site Reference, Official interpretation of 60(c) Direct Mail and Electronic Applications and Solicitations, Official interpretation of 60(d) Telephone Applications and Solicitations, Official interpretation of 60(e) Applications and Solicitations Made Available to General Public, Official interpretation of 60(e)(1) Disclosure of Required Credit Information, Official interpretation of 60(e)(2) No Disclosure of Credit Information, Official interpretation of 60(e)(3) Prompt Response to Requests for Information, Official interpretation of 60(f) In-Person Applications and Solicitations. Charges that are imposed as part of an open-end (not home-secured) plan and are not required to be disclosed under 1026.6(b)(2) may be disclosed after account opening but before the consumer agrees to pay or becomes obligated to pay for the charge, provided they are disclosed at a time and in a manner that a consumer would be likely to notice them. However, in these circumstances, 1026.5(b)(2)(ii)(A)(2) requires the card issuer to have reasonable procedures designed to ensure that a payment is not treated as late for any purpose during the 21-day period following mailing or delivery of the statement. (ii) Average daily balance (excluding new purchases). If fees for issuance or availability are optional, these fees should not be considered in determining whether the disclosure must be given. Section 1026.5(b)(2)(ii)(B)(1) does not apply to charged-off accounts where full payment of the entire account balance is due immediately because such accounts do not provide a grace period. A variable annual percentage rate is accurate if it was in effect within 30 days before printing. Should clearly refer to the disclosure provision it replaces. For example, the consumer does not use the account when a creditor sends a billing statement with start-up fees, there is no other activity on the account, the consumer does not pay the fees, and the creditor subsequently assesses a late fee or interest on the unpaid fee balances. 1026.34 Prohibited acts or practices in connection with high-cost mortgages. If a card issuer discloses in the table a preferential annual percentage rate for which only employees of the card issuer, employees of a third party, or other individuals with similar affiliations with the card issuer or third party, such as executive officers, directors, or principal shareholders are eligible, the card issuer must briefly disclose directly beneath the table the circumstances under which such preferential rate may be revoked, and the rate that will apply after such preferential rate is revoked. The fact that a term or contract may later be deemed unenforceable by a court on the basis of equity or other grounds does not, by itself, mean that disclosures based on that term or contract did not reflect the legal obligation. 4. For accounts under an open-end consumer credit plan, a creditor must adopt reasonable procedures designed to ensure that: (1) If a grace period applies to the account: (i) Periodic statements are mailed or delivered at least 21 days prior to the date on which the grace period expires; and. For example, assume that the consumer has $10 of funds in the asset feature of the prepaid account and initiates a transaction with a merchant to obtain goods or services with the hybrid prepaid-credit card for $25. Content. 1. See comment 7(b)-1.iv. i. When disclosures must be furnished before the first transaction, account-opening disclosures must be delivered before the consumer becomes obligated on the plan. Section 1026.60(b)(1)(v) applies even if other factors are used in combination with a consumer's creditworthiness to determine the rate for which a consumer may qualify at account opening. The oral disclosure under paragraph (d)(1) of this section need not be given if the card issuer either: (A) Does not impose a fee described in paragraph (b)(2) of this section; or, (B) Imposes such a fee but provides the consumer with a right to reject the plan consistent with 1026.5(b)(1)(iv); and. Explanation of dividends, including frequency, minimum balance requirements, etc. Assume that all the fees in the examples below are charged on the covered separate credit feature. May be used only until the supply of outdated forms is exhausted. A charge card issuer shall disclose the applicable items in paragraphs (b)(2), (4), (7) through (12), and (15) of this section. Creditors must provide such disclosures at a time and in a manner that a consumer would be likely to notice them. This provision does not apply to charges imposed as part of a home-equity plan subject to the requirements of 1026.40. 1026.1 Authority, purpose, coverage, organization, enforcement, and liability. An account is deemed uncollectible for purposes of 1026.5(b)(2)(i) when a creditor has ceased collection efforts, either directly or through a third party. Until January 1, 2013, issuers may substitute for this reference a reference to the Web site established by the Board of Governors of the Federal Reserve System. When a card issuer substitutes or replaces an existing credit card account with another credit card account, the card issuer must either provide notice of the terms of the new account consistent with 1026.6(b) or provide notice of the changes in the terms of the existing account consistent with 1026.9(c)(2). Enhancements. Consistent with paragraph (b)(1) of this section, the premium initial rate for purchases must be in at least 16-point type. However, the card issuer may continue to treat the $50 required minimum periodic payment as late during this period. When a consumer initiates a request, the creditor may permit, but may not require, the consumer to pick up periodic statements. credit card issuers from extending credit without assessing the consumer's ability to pay, with . Provisions in 1026.60(b) and its commentary provide that certain information must appear or is permitted to appear in a table. 1026.55 Limitations on increasing annual percentage rates, fees, and charges. An issuer may substitute the account-opening summary table described in 1026.6(b)(1) in lieu of the disclosures specified in 1026.60(d)(2)(ii). 3. The reasonably available standard requires that the creditor, acting in good faith, exercise due diligence in obtaining information. (g) Balance computation methods defined. (opens new page).) iii. 2. iii. Issuing a card to each primary cardholder (not authorized users) is considered a basic membership privilege and fees for additional cards, beyond the first card on the account, must be disclosed as a fee for issuance or availability. Need not be physically attached or affixed to the basic disclosure statement. For example, assume an issuer discloses an annual percentage rate for purchases of 18.99% but does not specify a time period during which that rate will be in effect. For example, assume that, consistent with 1026.52(b)(1)(ii), a card issuer's late payment fee will not exceed $35. If, however, the card issuer has made disclosures in accordance with the option in 1026.60(e)(2) and a consumer calls or writes the card issuer requesting information about costs, all the required disclosure information must be given. (If those disclosures are included in the take-one, the credit term disclosures need only be accurate as of the printing date. iv. In these circumstances, 1026.60(b)(5) requires that the issuer disclose the grace period and the conditions for its applicability using the following language, or substantially similar language, as applicable: Your due date is [at least] _ days after the close of each billing cycle. The fact that an issuer may reserve the right to change a rate subsequent to account opening, pursuant to the notice requirements of 1026.9(c) and the limitations in 1026.55, does not, by itself, make that rate an introductory rate. Section 1026.5(b)(2)(ii)(B)(1) does not require the creditor to provide a grace period or prohibit the creditor from placing limitations and conditions on a grace period to the extent consistent with 1026.5(b)(2)(ii)(B) and 1026.54. In addition, a card issuer may use a single application form as a take-one (in racks in public locations, for example) and for direct mailings, if the card issuer complies with the requirements of 1026.60(c) even when the form is used as a take-one - that is, by presenting the required 1026.60 disclosures in a tabular format. See 1026.60(b)(2) and related commentary for guidance on fees for issuance or availability of a credit or charge card. (1) Oral disclosure. General. (B) If no promotional rate applies to the checks: 5. All disclosures for the open-end credit plan must be given, even if the disclosing creditor would not otherwise have been obligated to make a particular disclosure. For example, the following are covered: 1. For example, 1026.60(b)(1)(v) would apply if the issuer considers the type of purchase the consumer is making at the time the consumer opens the account, in combination with the consumer's creditworthiness, to determine the rate for which the consumer may qualify at account opening. Whether the card issuer provides the consumer with a new credit card; B. Disclosing charges before the fee is imposed. Example. Because 1026.7(b)(11)(ii) provides that 1026.7(b)(11)(i) does not apply to periodic statements provided for charged-off accounts where full payment of the entire account balance is due immediately, 1026.5(b)(2)(ii)(A)(1) also does not apply to the mailing or delivery of periodic statements provided solely for such accounts. See interpretation of Paragraph 5(a)(1)(ii)(A) in Supplement I. Such a fee shall not be disclosed in the table if membership results merely in eligibility to apply for an account. 6. Card issuers have flexibility in satisfying this requirement. Clear and conspicuous standard. In disclosing the available credit, the issuer shall round down the available credit amount to the nearest whole dollar. Section 1026.60(a)(2)(i) generally requires that the headings, content and format of the tabular disclosures be substantially similar, but need not be identical, to the applicable tables in appendix G-10 to part 1026; but see 1026.5(a)(2) for terminology requirements applicable to 1026.60 disclosures. i. See comments 60(b)3 and 4. The maximum limit of $100 for the cash advance fee must be highlighted in bold. ii. The term penalty APR need not be used in reference to the annual percentage rate that applies with the loss of a promotional rate, assuming the annual percentage rate that applies is not greater than the annual percentage rate that would have applied at the end of the promotional period; or if the annual percentage rate that applies with the loss of a promotional rate is a variable rate, the annual percentage rate is calculated using the same index and margin as would have been used to calculate the annual percentage rate that would have applied at the end of the promotional period. The card issuer must not assume the existence of a purchase balance, however, in making other disclosures under 1026.60(b). See comments 7(b)(11)-1, 7(b)(11)-2, and 54(a)(1)-2. ii. Content. Variable-rate accounts - definition. Substituting account-opening table for alternative written disclosures. More than one introductory rate. The description of the specific event or events that may result in an increased rate should be brief. Likewise, if the card issuer initiates an in-person discussion with a consumer about opening a card account and contemporaneously takes an application, such applications are subject to 1026.60, specifically 1026.60(f). ), See interpretation of 60(c) Direct Mail and Electronic Applications and Solicitations in Supplement I. 1% of each transaction in U.S. dollars. The following examples illustrate these rules: i. (See comment 4(a)-4 for guidance on when a foreign transaction fee is considered charged by the card issuer.) Form of disclosures. For example, if an issuer may increase an employee preferential rate based upon termination of the employee's employment relationship with the issuer or a third party, issuers may describe this circumstance as if your employment with [issuer or third party] ends.. No grace period. If an issuer substitutes the account-opening summary table described in 1026.6(b)(1) in lieu of the disclosures specified in 1026.60(d)(2)(ii), the disclosure specified in 1026.60(d)(2)(ii)(B) must appear in the table, if the issuer is required to do so pursuant to 1026.6(b)(2)(xiii). Advances. Information disclosed. A card issuer complies with the requirements of this paragraph if the issuer provides disclosures in accordance with paragraph (c)(1) or (e)(1) of this section. The prohibitions in 1026.5(b)(2)(ii)(A)(2) and (b)(2)(B)(2)(ii) on treating a payment as late for any purpose apply only during the 21-day or 14-day period (as applicable) following mailing or delivery of the periodic statement stating the due date for that payment and only if the required minimum periodic payment is received within that period. ), 2. 1026.60 Credit and charge card applications and solicitations. For example, an issuer that uses the phrase introductory balance transfer APR X percent has used the word introductory within the same phrase as the rate. Reopening closed account. (viii) Certain disclosures provided when a rate is increased due to delinquency, default or as a penalty must be provided in a tabular format in accordance with the requirements of 1026.9(g)(3)(ii). 1. Other information may be presented on or with an application or solicitation, provided such information appears outside the required table. ii. Introductory rates - limitations on revocation. ii. If a statement was returned as undeliverable. See interpretation of 60(e)(1) Disclosure of Required Credit Information in Supplement I. See Sample G-10(B) for guidance on how to comply with the requirements in 1026.60(b)(13). B. 3. 1026.8 Identifying transactions on periodic statements. ii. In disclosing the amount of the finance charge, required by 1026.7(a)(6)(i), the term finance charge is subject to the more conspicuous rule. Information permitted in the table. (ii) A cross reference to any additional information provided about the insurance or coverage accompanying the application or solicitation, as applicable. Same facts as in paragraph i above. 2. For example, assume an issuer discloses an annual percentage rate for purchases of 12.99% but does not specify a time period during which that rate will be in effect. (A) Credit card accounts under an open-end (not home-secured) consumer credit plan. For example, if an issuer may increase a rate to the penalty rate because the consumer does not make the minimum payment by 5 p.m., Eastern Time, on its payment due date, the issuer should describe this circumstance in the table as make a late payment. Similarly, if an issuer may increase a rate that applies to a particular balance because the account is more than 60 days late, the issuer should describe this circumstance in the table as make a late payment. An issuer may not distinguish between the events that may result in an increased rate for existing balances and the events that may result in an increased rate for new transactions. For example, if a consumer telephones a card issuer to discuss a particular service, a creditor would meet the standard if the creditor clearly and conspicuously discloses the fee associated with the service that is the topic of the telephone call orally to the consumer. If the exact appraisal fee is determinable after the estimate is furnished but before the consumer receives the first advance under the plan, no new disclosure is necessary. Charges imposed by person other than card issuer. (iv) When a tabular format is required, any annual percentage rate required to be disclosed pursuant to paragraph (b)(1) of this section, any introductory rate required to be disclosed pursuant to paragraph (b)(1)(ii) of this section, any rate that will apply after a premium initial rate expires required to be disclosed under paragraph (b)(1)(iii) of this section, and any fee or percentage amounts or maximum limits on fee amounts disclosed pursuant to paragraphs (b)(2), (b)(4), (b)(8) through (b)(13) of this section must be disclosed in bold text. Issuers that are disclosing an introductory rate are prohibited by 1026.55 from increasing or revoking the introductory rate before it expires unless the consumer fails to make a required minimum periodic payment within 60 days after the due date for the payment. Assume also that, under the terms of the account, the balance at the end of a billing cycle must be paid in full by the following payment due date in order for the account to remain eligible for the grace period. A card issuer shall disclose the information in paragraph (b) of this section, to the extent applicable, on or with an application or solicitation that is initiated by the card issuer and given to the consumer in person. Except as provided in paragraph (b)(1)(iv)(B) and (C) of this section, if a rate may increase as a penalty for one or more events specified in the account agreement, such as a late payment or an extension of credit that exceeds the credit limit, the card issuer must disclose pursuant to this paragraph (b)(1) the increased rate that may apply, a brief description of the event or events that may result in the increased rate, and a brief description of how long the increased rate will remain in effect. Similarly, a period following the payment due date during which a late payment fee will not be imposed is not a grace period for purposes of 1026.5(b)(2)(ii)(B). Creditors may disclose charges imposed as part of an open-end (not home-secured) plan orally or in writing at any time before a consumer agrees to pay the fee or becomes obligated for the charge, unless the charge is specified under 1026.6(b)(2). ** This balance is figured by adding the outstanding balance (including new purchases and deducting payments and credits) for each day in the billing cycle, and then dividing by the number of days in the billing cycle. Any fee imposed for an extension of credit in the form of cash or its equivalent. (4) Fees that vary by state. (15) Web site reference. ii. A consumer does not use the account by activating the account. Information disclosed by banks The information that banks must provide in an application form or before entering into an agreement, must be in a prominently displayed information box. Adjustment of $1.00 threshold amount. ATM fees. See interpretation of 60(b)(14) Available Credit in Supplement I. 7. Maximum limits on fees. In cases where the card issuer uses a balance computation method that is identified by name in 1026.60(g), the card issuer must disclose below the table only the name of the method. If, however, the card issuer calls a consumer or initiates a telephone discussion with a consumer about opening a card account and contemporaneously takes an oral application, such applications are subject to 1026.60, specifically 1026.60(d). The Bureau shall calculate each year a price level adjusted minimum interest charge using the Consumer Price Index in effect on June 1 of that year. Same facts as in paragraph i above. (2) Regardless of whether a grace period applies to the account: (i) Periodic statements are mailed or delivered at least 14 days prior to the date on which the required minimum periodic payment must be received in order to avoid being treated as late for any purpose; and. A card issuer must disclose that the fee is a one-time fee. In this example, the $10 fee disclosure would not be disclosed in bold, but the $120 annualized amount must be disclosed in bold. B. If the initial rate is an introductory rate, as that term is defined in 1026.16(g)(2)(ii), the card issuer must disclose in the table the introductory rate, the time period during which the introductory rate will remain in effect, and must use the term introductory or intro in immediate proximity to the introductory rate. (i) The disclosures in paragraphs (b)(1) through (5) (except for (b)(1)(iv)(B)) and (b)(7) through (15) of this section made pursuant to paragraph (c), (d)(2), (e)(1) or (f) of this section generally shall be in the form of a table with headings, content, and format substantially similar to any of the applicable tables found in G-10 in appendix G to this part. Lenders have to provide borrowers a Truth in Lending disclosure statement. This balance is figured by deducting payments and credits made during the billing cycle from the outstanding balance at the beginning of the billing cycle. The disclosure of the fee for a late payment includes only those fees that will be imposed for actual, unanticipated late payments. The annual percentage rate for purchases disclosed pursuant to this paragraph shall be in at least 16-point type, except for the following: Oral disclosures of the annual percentage rate for purchases; or a penalty rate that may apply upon the occurrence of one or more specific events.
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credit card disclosure requirements
