Regulation DD implements the
Truth in Savings Act (TISA) (12 U.S.C. 4301 et seq.), which
was enacted as part of the Federal Deposit Insurance Corporation Improvement
Act of 1991 (Pub. L. 102-242, 105 Stat. 2236). The TISA was amended
by the Housing and Community Development Act of 1992 (Pub. L. 102-550,
106 Stat. 3672), the Riegle Community Development and Regulatory Improvement
Act of 1994 (Pub. L. 103-325, 108 Stat. 2160), and the Economic Growth
and Regulatory Paperwork Reduction Act of 1996 (Pub. L. 104-208, 110
Stat. 3009). The purpose of the act and regulation is to require depository
institutions to clearly and conspicuously disclose fees, interest
rates, and other terms concerning deposit accounts so that consumers
can compare savings and investment products. Rules dealing with advertising
are also included.
Regulation DD requires depository institutions to disclose
to consumers the fees and other account features, the interest rate,
and the annual percentage yield (APY) before they open accounts. Institutions
must calculate interest on the full amount of principal on deposit
in the account for each day and are prohibited from using methods
such as the “low-balance” or “investable-balance” methods to calculate
interest. They must also disclose the minimum balance required to
open the account, to avoid fees, or to obtain the APY; the balance-computation
method; any fees for maintaining the account; any limitations on the
number or amount of withdrawals and deposits; and, for time accounts,
any early withdrawal penalties and details regarding renewal policies.
For variable-rate accounts, disclosures will alert the
consumer of potential rate changes and the frequency of the changes.
For most automatically renewable time accounts, special notices must
be given before maturity. Generally, when a change in one of the disclosed
terms may reduce the APY or adversely affect the consumer, advance
notice is required. Although institutions are not required to provide
periodic statements, if they do they must include information such
as fees imposed, the interest earned, and the APY earned.
Any rate advertised must be stated
as an “annual percentage yield,” and no other rate except an “interest
rate” may be shown. Limited exemptions from certain advertising disclosures
are extended to broadcast or electronic media, outdoor media, telephone-response
machines, and certain indoor signs.
As proof of compliance, institutions must retain documentation,
as necessary, for two years.
