(a) Limitations prior to account opening and during first year after
account opening.
(1) General rule. Except as provided in paragraph (a)(2) of this section, the total
amount of fees a consumer is required to pay with respect to a credit
card account under an open-end (not home-secured) consumer credit
plan prior to account opening and during the first year after account
opening must not exceed 25 percent of the credit limit in effect when
the account is opened. For purposes of this paragraph, an account
is considered open no earlier than the date on which the account may
first be used by the consumer to engage in transactions.
(2) Fees not subject to limitations. Paragraph (a) of this section
does not apply to:
(i) Late payment fees, over-the-limit
fees, and returned-payment fees; or
(ii) Fees that the consumer is not required
to pay with respect to the account.
(3) Rule of construction. Paragraph (a) of this section does not authorize the imposition
or payment of fees or charges otherwise prohibited by law.
(b) Limitations on penalty
fees. A card issuer must not impose a fee for violating the terms
or other requirements of a credit card account under an open-end (not
home-secured) consumer credit plan unless the dollar amount of the
fee is consistent with paragraphs (b)(1) and (b)(2) of this section.
(1) General rule. Except as provided in paragraph (b)(2) of this
section, a card issuer may impose a fee for violating the terms or
other requirements of a credit card account under an open-end (not
home-secured) consumer credit plan if the dollar amount of the fee
is consistent with either paragraph (b)(1)(i) or (b)(1)(ii) of this
section.
(i) Fees based
on costs. A card issuer may impose a fee for violating the terms
or other requirements of an account if the card issuer has determined
that the dollar amount of the fee represents a reasonable proportion
of the total costs incurred by the card issuer as a result of that
type of violation. A card issuer must reevaluate this determination
at least once every twelve months. If as a result of the reevaluation
the card issuer determines that a lower fee represents a reasonable
proportion of the total costs incurred by the card
issuer as a result of that type of violation, the card issuer must
begin imposing the lower fee within 45 days after completing the reevaluation.
If as a result of the reevaluation the card issuer determines that
a higher fee represents a reasonable proportion of the total costs
incurred by the card issuer as a result of that type of violation,
the card issuer may begin imposing the higher fee after complying
with the notice requirements in section 226.9.
(ii) Safe
harbors. A card issuer may impose a fee for violating the terms
or other requirements of an account if the dollar amount of the fee
does not exceed, as applicable:
(A) $25.00;
(B) $35.00 if the card issuer previously imposed
a fee pursuant to paragraph (b)(1)(ii)(A) of this section for a violation
of the same type that occurred during the same billing cycle or one
of the next six billing cycles; or
(C) Three percent of the delinquent balance
on a charge card account that requires payment of outstanding balances
in full at the end of each billing cycle if the card issuer has not
received the required payment for two or more consecutive billing
cycles.
(D) The amounts
in paragraphs (b)(1)(ii)(A) and (b)(1)(ii)(B) of this section will
be adjusted annually by the Board to reflect changes in the Consumer
Price Index.
(2) Prohibited
fees.
(i) Fees that
exceed dollar amount associated with violation.
(A) Generally. A card issuer must not impose
a fee for violating the terms or other requirements of a credit card
account under an open-end (not home-secured) consumer credit plan
that exceeds the dollar amount associated with the violation.
(B) No dollar amount associated with violation. A card issuer must
not impose a fee for violating the terms or other requirements of
a credit card account under an open-end (not home-secured) consumer
credit plan when there is no dollar amount associated with the violation.
For purposes of paragraph (b)(2)(i) of this section, there is no dollar
amount associated with the following violations:
(1) Transactions that the card issuer
declines to authorize;
(2) Account inactivity; and
(3) The closure or termination of
an account.
(ii) Multiple
fees based on a single event or transaction. A card issuer must
not impose more than one fee for violating the terms or other requirements
of a credit card account under an open-end (not home-secured) consumer
credit plan based on a single event or transaction. A card issuer
may, at its option, comply with this prohibition by imposing no more
than one fee for violating the terms or other requirements of an account
during a billing cycle.
