(a) Furnishing statement of billing rights.
(1) Annual statement. The creditor shall mail or deliver the billing rights statement
required by section 226.6(a)(5) and (b)(5)(iii) at least once per
calendar year, at intervals of not less than 6 months nor more than
18 months, either to all consumers or to each consumer entitled to
receive a periodic statement under section 226.5(b)(2) for any one
billing cycle.
(2) Alternative summary statement. As an alternative
to paragraph (a)(1) of this section, the creditor may mail or deliver,
on or with each periodic statement, a statement substantially similar
to Model Form G-4 or Model Form G-4(A) in appendix G to this part,
as applicable. Creditors offering home-equity plans subject to the
requirements of section 226.5b may use either Model Form, at their
option.
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(b) Disclosures
for supplemental credit access devices and additional features.
(1) If a creditor, within
30 days after mailing or delivering the account-opening disclosures
under section 226.6(a)(1) or (b)(3)(ii)(A), as applicable, adds a
credit feature to the consumer’s account or mails or delivers to the
consumer a credit access device, including but not limited to checks
that access a credit card account, for which the finance charge terms
are the same as those previously disclosed, no additional disclosures
are necessary. Except as provided in paragraph (b)(3) of this section,
after 30 days, if the creditor adds a credit feature or furnishes
a credit access device (other than as a renewal, resupply, or the
original issuance of a credit card) on the same finance charge terms,
the creditor shall disclose, before the consumer uses the feature
or device for the first time, that it is for use in obtaining credit
under the terms previously disclosed.
(2) Except as provided in paragraph (b)(3)
of this section, whenever a credit feature is added or a credit access
device is mailed or delivered to the consumer, and the finance charge
terms for the feature or device differ from disclosures previously
given, the disclosures required by section 226.6(a)(1) or (b)(3)(ii)(A),
as applicable, that are applicable to the added feature or device
shall be given before the consumer uses the feature or device for
the first time.
(3) Checks that access a credit card account.
(i) Disclosures. For open-end plans not subject to the requirements of section 226.5b,
if checks that can be used to access a credit card account are provided
more than 30 days after account-opening disclosures under section
226.6(b) are mailed or delivered, or are provided within 30 days of
the account-opening disclosures and the finance charge terms for the
checks differ from the finance charge terms previously disclosed,
the creditor shall disclose on the front of the page containing the
checks the following terms in the form of a table with the headings,
content, and form substantially similar to Sample G-19 in appendix
G to this part:
(A) If a promotional rate, as that term is
defined in section 26.16(g)(2)(i) applies to the checks:
(1) The promotional rate and the time
period during which the promotional rate will remain in effect;
(2) The type of rate
that will apply (such as whether the purchase or cash advance rate
applies) after the promotional rate expires, and the annual percentage
rate that will apply after the promotional rate expires. For a variable-rate
account, a creditor must disclose an annual percentage rate based
on the applicable index or formula in accordance with the accuracy
requirements set forth in paragraph (b)(3)(ii) of this section; and
(3) The date, if
any, by which the consumer must use the checks in order to qualify
for the promotional rate. If the creditor will honor checks used
after such date but will apply an annual percentage rate other than
the promotional rate, the creditor must disclose this fact and the
type of annual percentage rate that will apply if the consumer uses
the checks after such date.
(B) If no promotional rate applies to the
checks:
(1) The type of rate
that will apply to the checks and the applicable annual percentage
rate. For a variable-rate account, a creditor must disclose an annual
percentage rate based on the applicable index or formula in accordance
with the accuracy requirements set forth in paragraph (b)(3)(ii) of
this section.
(2) [Reserved]
(C) Any transaction fees applicable to the checks disclosed under
section 226.6(b)(2)(iv); and
(D) Whether or not a grace period is given within which any credit
extended by use of the checks may be repaid without incurring a finance
charge due to a periodic interest rate. When disclosing whether there
is a grace period, the phrase “How to Avoid Paying Interest on Check
Transactions” shall be used as the row heading when a grace period
applies to credit extended by the use of the checks. When disclosing
the fact that no grace period exists for credit extended by use of
the checks, the phrase “Paying Interest” shall be used as the row
heading.
(ii) Accuracy. The disclosures in
paragraph (b)(3)(i) of this section must be accurate as of the time
the disclosures are mailed or delivered. A variable annual percentage
rate is accurate if it was in effect within 60 days of when the disclosures
are mailed or delivered.
(iii) Variable rates. If any annual
percentage rate required to be disclosed pursuant to paragraph (b)(3)(i)
of this section is a variable rate, the card issuer shall also disclose
the fact that the rate may vary and how the rate is determined. In
describing how the applicable rate will be determined, the card issuer
must identify the type of index or formula that is used in setting
the rate. The value of the index and the amount of the margin that
are used to calculate the variable rate shall not be disclosed in
the table. A disclosure of any applicable limitations on rate increases
shall not be included in the table.
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(c) (1) Rules affecting home-equity plans.
(i) Written notice required. For home-equity
plans subject to the requirements of section 226.5b, whenever any
term required to be disclosed under section 226.6(a) is changed or
the required minimum periodic payment is increased, the creditor shall
mail or deliver written notice of the change to each consumer who
may be affected. The notice shall be mailed or delivered at least
15 days prior to the effective date of the change. The 15-day timing
requirement does not apply if the change has been agreed to by the
consumer; the notice shall be given, however, before the effective
date of the change.
(ii) Notice not required. For home-equity
plans subject to the requirements of section 226.5b, a creditor is
not required to provide notice under this section when the change
involves a reduction of any component of a finance or other charge
or when the change results from an agreement involving a court proceeding.
(iii) Notice to restrict credit. For home-equity
plans subject to the requirements of section 226.5b, if the creditor
prohibits additional extensions of credit or reduces the credit limit
pursuant to section 226.5b(f)(3)(i) or (f)(3)(vi), the creditor shall
mail or deliver written notice of the action to each consumer who
will be affected. The notice must be provided not later than three
business days after the action is taken and shall contain specific
reasons for the action. If the creditor requires the consumer to request
reinstatement of credit privileges, the notice also shall state that
fact.
(2) Rules affecting open-end (not home-secured)
plans.
(i) Changes
where written advance notice is required.
(A) General. For plans other than home-equity
plans subject to the requirements of section 226.5b, except as provided
in paragraphs (c)(2)(i)(B), (c)(2)(iii) and (c)(2)(v) of this section,
when a significant change in account terms as described in paragraph
(c)(2)(ii) of this section is made, a creditor must provide a written
notice of the change at least 45 days prior to the effective date
of the change to each consumer who may be affected. The 45-day timing
requirement does not apply if the consumer has agreed to a particular
change as described in paragraph (c)(2)(i)(B) of this section; for
such changes, notice must be given in accordance with the timing requirements
of paragraph (c)(2)(i)(B) of this section. Increases in the rate applicable
to a consumer’s account due to delinquency, default or as a penalty
described in paragraph (g) of this section that are not due to a change
in the contractual terms of the consumer’s account must be disclosed
pursuant to paragraph (g) of this section instead of paragraph (c)(2)
of this section.
(B) Changes agreed to by the consumer. A notice
of change in terms is required, but it may be mailed or delivered
as late as the effective date of the change if the consumer agrees
to the particular change. This paragraph (c)(2)(i)(B) applies only
when a consumer substitutes collateral or when the creditor can advance
additional credit only if a change relatively unique to that consumer
is made, such as the consumer’s providing additional security or paying
an increased minimum payment amount. The following are not considered
agreements between the consumer and the creditor for purposes of this
paragraph (c)(2)(i)(B): the consumer’s general acceptance of the creditor’s
contract reservation of the right to change terms; the consumer’s
use of the account (which might imply acceptance of its terms under
state law); the consumer’s acceptance of a unilateral term change
that is not particular to that consumer, but rather is of general
applicability to consumers with that type of account; and the consumer’s
request to reopen a closed account or to upgrade an existing account
to another account offered by the creditor with different credit or
other features.
(ii) Significant
changes in account terms. For purposes of this section, a “significant
change in account terms” means a change to a term required to be disclosed
under section 226.6(b)(1) and (b)(2), an increase in the required
minimum periodic payment, a change to a term required to be disclosed
under section 226.6(b)(4), or the acquisition of a security interest.
(iii) Charges not covered by section 226.6(b)(1) and
(b)(2). Except as provided in paragraph (c)(2)(vi) of this section,
if a creditor increases any component of a charge, or introduces a
new charge, required to be disclosed under section 226.6(b)(3) that
is not a significant change in account terms as described in paragraph
(c)(2)(ii) of this section, a creditor must either, at its option:
(A) Comply with the requirements of paragraph (c)(2)(i) of this section;
or
(B) Provide notice
of the amount of the charge before the consumer agrees to or becomes
obligated to pay the charge, at a time and in a manner that a consumer
would be likely to notice the disclosure of the charge. The notice
may be provided orally or in writing.
(iv) Disclosure
requirements.
(A) Significant
changes in account terms. If a creditor makes a significant change
in account terms as described in paragraph (c)(2)(ii) of this section,
the notice provided pursuant to paragraph (c)(2)(i) of this section
must provide the following information:
(1) A summary of the changes made to terms required by section
226.6(b)(1) and (b)(2) or section 226.6(b)(4), a description of any
increase in the required minimum periodic payment, and a description
of any security interest being acquired by the creditor;
(2) A statement that
changes are being made to the account;
(3) For accounts other than credit
card accounts under an open-end (not home-secured) consumer credit
plan subject to section 226.9(c)(2)(iv)(B), a statement indicating
the consumer has the right to opt out of these changes, if applicable,
and a reference to additional information describing the opt-out right
provided in the notice, if applicable;
(4) The date the changes will become
effective;
(5)
If applicable, a statement that the consumer may find additional information
about the summarized changes, and other changes to the account, in
the notice;
(6)
If the creditor is changing a rate on the account, other than a penalty
rate, a statement that if a penalty rate currently applies to the
consumer’s account, the new rate described in the notice will not
apply to the consumer’s account until the consumer’s account balances
are no longer subject to the penalty rate;
(7) If the change in terms being disclosed
is an increase in an annual percentage rate, the balances to which
the increased rate will be applied. If applicable, a statement identifying
the balances to which the current rate will continue to apply as of
the effective date of the change in terms; and
(8) If the change in terms being disclosed
is an increase in an annual percentage rate for a credit card account
under an open-end (not home-secured) consumer credit plan, a statement
of no more than four principal reasons for the rate increase, listed
in their order of importance.
(B) Right to reject
for credit card accounts under an open-end (not home-secured) consumer
credit plan. In addition to the disclosures in paragraph (c)(2)(iv)(A)
of this section, if a card issuer makes a significant change in account
terms on a credit card account under an open-end (not home-secured)
consumer credit plan, the creditor must generally provide the following
information on the notice provided pursuant to paragraph (c)(2)(i)
of this section. This information is not required to be provided in
the case of an increase in the required minimum periodic payment,
an increase in a fee as a result of a reevaluation of a determination
made under section 226.52(b)(1)(i) or an adjustment to the safe harbors
in section 226.52(b)(1)(ii) to reflect changes in the Consumer Price
Index, a change in an annual percentage rate applicable to a consumer’s
account, an increase in a fee previously reduced consistent with 50
U.S.C. app. 527 or a similar Federal or State statute or regulation
if the amount of the increased fee does not exceed the amount of that
fee prior to the reduction, or when the change results from the creditor
not receiving the consumer’s required minimum periodic payment within
60 days after the due date for that payment:
(1) A statement that the consumer
has the right to reject the change or changes prior to the effective
date of the changes, unless the consumer fails to make a required
minimum periodic payment within 60 days after the due date for that
payment;
(2) Instructions
for rejecting the change or changes, and a toll-free telephone number
that the consumer may use to notify the creditor of the rejection;
and
(3) If applicable,
a statement that if the consumer rejects the change or changes,
the consumer’s ability to use the account for further advances will
be terminated or suspended.
(C) Changes resulting
from failure to make minimum periodic payment within 60 days from
due date for credit card accounts under an open-end (not home-secured)
consumer credit plan. For a credit card account under an open-end
(not home-secured) consumer credit plan:
(1) If the significant change required to be disclosed pursuant
to paragraph (c)(2)(i) of this section is an increase in an annual
percentage rate or a fee or charge required to be disclosed under
section 226.6(b)(2)(ii), (b)(2)(iii), or (b)(2)(xii) based on the
consumer’s failure to make a minimum periodic payment within 60 days
from the due date for that payment, the notice provided pursuant to
paragraph (c)(2)(i) of this section must state that the increase will
cease to apply to transactions that occurred prior to or within 14
days of provision of the notice, if the creditor receives six consecutive
required minimum periodic payments on or before the payment due date,
beginning with the first payment due following the effective date
of the increase.
(2) If the significant change required to be disclosed pursuant
to paragraph (c)(2)(i) of this section is an increase in a fee or
charge required to be disclosed under section 226.6(b)(2)(ii), (b)(2)(iii),
or (b)(2)(xii) based on the consumer’s failure to make a minimum periodic
payment within 60 days from the due date for that payment, the notice
provided pursuant to paragraph (c)(2)(i) of this section must also
state the reason for the increase.
(D) Format requirements. {}
(1) Tabular format. The summary of changes
described in paragraph (c)(2)(iv)(A)(1) of this section must
be in a tabular format (except for a summary of any increase in the
required minimum periodic payment, a summary of a term required to
be disclosed under section 226.6(b)(4) that is not required to be
disclosed under section 226.6(b)(1) and (b)(2), or a description of
any security interest being acquired by the creditor), with headings
and format substantially similar to any of the account-opening tables
found in G-17 in appendix G to this part. The table must disclose
the changed term and information relevant to the change, if that relevant
information is required by section 226.6(b)(1) and (b)(2). The new
terms shall be described in the same level of detail as required when
disclosing the terms under section 226.6(b)(2).
(v) Notice not required. For open-end plans
(other than home equity plans subject to the requirements of section
226.5b) a creditor is not required to provide notice under this section:
(A) When the change involves charges for documentary evidence; a
reduction of any component of a finance or other charge; suspension
of future credit privileges (except as provided in paragraph (c)(2)(vi)
of this section) or termination of an account or plan; when the change
results from an agreement involving a court proceeding; when the change
is an extension of the grace period; or if the change is applicable
only to checks that access a credit card account and the changed terms
are disclosed on or with the checks in accordance with paragraph (b)(3)
of this section;
(B) When
the change is an increase in an annual percentage rate or fee upon
the expiration of a specified period of time, provided that:
(1) Prior to commencement of that
period, the creditor disclosed in writing to the consumer, in a clear
and conspicuous manner, the length of the period and the annual percentage
rate or fee that would apply after expiration of the period;
(2) The disclosure of
the length of the period and the annual percentage rate or fee that
would apply after expiration of the period are set forth in close
proximity and in equal prominence to the first listing of the disclosure
of the rate or fee that applies during the specified period of time;
and
(3) The annual
percentage rate or fee that applies after that period does not exceed
the rate or fee disclosed pursuant to paragraph (c)(2)(v)(B)(1) of this paragraph or, if the rate disclosed pursuant to paragraph
(c)(2)(v)(B)(1) of this section was a variable rate, the rate
following any such increase is a variable rate determined by the same
formula (index and margin) that was used to calculate the variable
rate disclosed pursuant to paragraph (c)(2)(v)(B)(1);
(C) When the change is an
increase in a variable annual percentage rate in accordance with a
credit card or other account agreement that provides for changes in
the rate according to operation of an index that is not under the
control of the creditor and is available to the general public; or
(D) When the change is an
increase in an annual percentage rate, a fee or charge required to
be disclosed under section 226.6(b)(2)(ii), (b)(2)(iii), (b)(2)(viii),
(b)(2)(ix), (b)(2)(ix) or (b)(2)(xii), or the required minimum periodic
payment due to the completion of a workout or temporary hardship arrangement
by the consumer or the consumer’s failure to comply with the terms
of such an arrangement, provided that:
(1) The annual percentage rate or fee or charge applicable
to a category of transactions or the required minimum periodic payment
following any such increase does not exceed the rate or fee or charge
or required minimum periodic payment that applied to that category
of transactions prior to commencement of the arrangement or, if the
rate that applied to a category of transactions prior to the commencement
of the workout or temporary hardship arrangement was a variable rate,
the rate following any such increase is a variable rate determined
by the same formula (index and margin) that applied to the category
of transactions prior to commencement of the workout or temporary
hardship arrangement; and
(2) The creditor has provided the consumer, prior to the commencement
of such arrangement, with a clear and conspicuous disclosure of the
terms of the arrangement (including any increases due to such completion
or failure). This disclosure must generally be provided in writing.
However, a creditor may provide the disclosure of the terms of the
arrangement orally by telephone, provided that the creditor mails
or delivers a written disclosure of the terms of the arrangement to
the consumer as soon as reasonably practicable after the oral disclosure
is provided.
(vi) Reduction
of the credit limit. For open-end plans that are not subject
to the requirements of section 226.5b, if a creditor decreases the
credit limit on an account, advance notice of the decrease must be
provided before an over-the-limit fee or a penalty rate can be imposed
solely as a result of the consumer exceeding the newly decreased credit
limit. Notice shall be provided in writing or orally at least 45 days
prior to imposing the over-the-limit fee or penalty rate and shall
state that the credit limit on the account has been or will be decreased.
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(d) Finance
charge imposed at time of transaction.
(1) Any person, other than the card issuer,
who imposes a finance charge at the time of honoring a consumer’s
credit card, shall disclose the amount of that finance charge prior
to its imposition.
(2)
The card issuer, other than the person honoring the consumer’s credit
card, shall have no responsibility for the disclosure required by
paragraph (d)(1) of this section, and shall not consider any such
charge for the purposes of sections. 226.5a, 226.6, and 226.7.
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(e) Disclosures upon renewal
of credit or charge card.
(1) Notice prior
to renewal. A card issuer that imposes any annual or other periodic
fee to renew a credit or charge card account of the type subject to
section 226.5a, including any fee based on account activity or inactivity
or any card issuer that has changed or amended any term of a cardholder’s
account required to be disclosed under section 226.6(b)(1) and (b)(2)
that has not previously been disclosed to the consumer, shall mail
or deliver written notice of the renewal to the cardholder. If the
card issuer imposes any annual or other periodic fee for renewal,
the notice shall be provided at least 30 days or one billing cycle,
whichever is less, before the mailing or the delivery of the periodic
statement on which any renewal fee is initially charged to the account.
If the card issuer has changed or amended any term required to be
disclosed under section 226.6(b)(1) and (b)(2) and such changed or
amended term has not previously been disclosed to the consumer, the
notice shall be provided at least 30 days prior to the scheduled renewal
date of the consumer’s credit or charge card. The notice shall contain
the following information:
(i) The disclosures contained in section
226.5a(b)(1) through
(b)(7) that would apply if the account were renewed;
20a and
(ii)
How and when the cardholder may terminate credit availability under
the account to avoid paying the renewal fee, if applicable.
(2) Notification on periodic statements. The
disclosures required by this paragraph may be made on or with a periodic
statement. If any of the disclosures are provided on the back of a
periodic statement, the card issuer shall include a reference to those
disclosures on the front of the statement.
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(f) Change in credit card account insurance
provider.
(1) Notice prior
to change. If a credit card issuer plans to change the provider
of insurance for repayment of all or part of the outstanding balance
of an open-end credit card account of the type subject to section
226.5a, the card issuer shall mail or deliver to the cardholder written
notice of the change not less than 30 days before the change in provider
occurs. The notice shall also include the following items, to the
extent applicable:
(i) Any increase in the rate that will
result from the change;
(ii) Any substantial decrease in coverage
that will result from the change; and
(iii) A statement that the cardholder
may discontinue the insurance.
(2) Notice when
change in provider occurs. If a change described in paragraph
(f)(1) of this section occurs, the card issuer shall provide the cardholder
with a written notice no later than 30 days after the change, including
the following items, to the extent applicable:
(i) The
name and address of the new insurance provider;
(ii) A copy of the new policy or group
certificate containing the basic terms of the insurance, including
the rate to be charged; and
(iii) A statement that the cardholder
may discontinue the insurance.
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(3) Substantial
decrease in coverage. For purposes of this paragraph, a substantial
de crease in coverage is a decrease in a significant term of
coverage that might reasonably be expected to affect the cardholder’s
decision to continue the insurance. Significant terms of coverage
include, for example, the following:
(i) Type of coverage
provided;
(ii) Age
at which coverage terminates or becomes more restrictive;
(iii) Maximum insurable
loan balance, maximum periodic benefit payment, maximum number of
payments, or other term affecting the dollar amount of coverage or
benefits provided;
(iv) Eligibility requirements and number and identity of persons
covered;
(v) Definition
of a key term of coverage such as disability;
(vi) Exclusions from or limitations
on coverage; and
(vii) Waiting periods and whether coverage is retroactive.
(4) Combined notification. The notices required by paragraph (f)(1)
and (2) of this section may be combined provided the timing requirement
of paragraph (f)(1) of this section is met. The notices may be provided
on or with a periodic statement.
(g) Increase in rates due to delinquency or default
or as a penalty.
(1) Increases
subject to this section. For plans other than home-equity plans
subject to the requirements of section 226.5b, except as provided
in paragraph (g)(4) of this section, a creditor must provide a written
notice to each consumer who may be affected when:
(i) A rate
is increased due to the consumer’s delinquency or default; or
(ii) A rate is increased
as a penalty for one or more events specified in the account agreement,
such as making a late payment or obtaining an extension of credit
that exceeds the credit limit.
(2) Timing of
written notice. Whenever any notice is required to be given pursuant
to paragraph (g)(1) of this section, the creditor shall provide written
notice of the increase in rates at least 45 days prior to the effective
date of the increase. The notice must be provided after the occurrence
of the events described in paragraphs (g)(1)(i) and (g)(1)(ii) of
this section that trigger the imposition of the rate increase.
(3) (i) Disclosure requirements for rate increases.
(A) General. If a creditor is increasing the
rate due to delinquency or default or as a penalty, the creditor must
provide the following information on the notice sent pursuant to paragraph
(g)(1) of this section:
(1) A statement that the delinquency or default rate or penalty
rate, as applicable, has been triggered;
(2) The date on which the delinquency
or default rate or penalty rate will apply;
(3) The circumstances under which
the delinquency or default rate or penalty rate, as applicable, will
cease to apply to the consumer’s account, or that the delinquency
or default rate or penalty rate will remain in effect for a potentially
indefinite time period;
(4) A statement indicating to which balances the delinquency
or default rate or penalty rate will be applied;
(5) If applicable, a description of
any balances to which the current rate will continue to apply as of
the effective date of the rate increase, unless a consumer fails to
make a minimum periodic payment within 60 days from the due date for
that payment; and
(6) For a credit card account under an open-end (not home-secured)
consumer credit plan, a statement of no more than four principal reasons
for the rate increase, listed in their order of importance.
(B) Rate increases resulting from failure to make minimum periodic payment
within 60 days from due date. For a credit card account under
an open-end (not home-secured) consumer credit plan, if the rate increase
required to be disclosed pursuant to paragraph (g)(1)
of this section is an increase pursuant to section 226.55(b)(4) based
on the consumer’s failure to make a minimum periodic payment within
60 days from the due date for that payment, the notice provided pursuant
to paragraph (g)(1) of this section must also state that the increase
will cease to apply to transactions that occurred prior to or within
14 days of provision of the notice, if the creditor receives six consecutive
required minimum periodic payments on or before the payment due date,
beginning with the first payment due following the effective date
of the increase.
(ii) Format
requirements.
(A) If a notice required by paragraph (g)(1)
of this section is included on or with a periodic statement, the information
described in paragraph (g)(3)(i) of this section must be in the form
of a table and provided on the front of any page of the periodic statement,
above the notice described in paragraph (c)(2)(iv) of this section
if that notice is provided on the same statement.
(B) If a notice required by paragraph (g)(1)
of this section is not included on or with a periodic statement, the
information described in paragraph (g)(3)(i) of this section must
be disclosed on the front of the first page of the notice. Only information
related to the increase in the rate to a penalty rate may be included
with the notice, except that this notice may be combined with a notice
described in paragraph (c)(2)(iv) or (g)(4) of this section.
(4) Exception for decrease in credit limit. A creditor is not required to provide a notice pursuant to paragraph
(g)(1) of this section prior to increasing the rate for obtaining
an extension of credit that exceeds the credit limit, provided that:
(i) The creditor provides at least 45 days in advance of imposing
the penalty rate a notice, in writing, that includes:
(A) A statement
that the credit limit on the account has been or will be decreased.
(B) A statement indicating
the date on which the penalty rate will apply, if the outstanding
balance exceeds the credit limit as of that date;
(C) A statement that the penalty rate will
not be imposed on the date specified in paragraph (g)(4)(i)(B) of
this section, if the outstanding balance does not exceed the credit
limit as of that date;
(D) The circumstances under which the penalty rate, if applied, will
cease to apply to the account, or that the penalty rate, if applied,
will remain in effect for a potentially indefinite time period;
(E) A statement indicating
to which balances the penalty rate may be applied; and
(F) If applicable, a description
of any balances to which the current rate will continue to apply as
of the effective date of the rate increase, unless the consumer fails
to make a minimum periodic payment within 60 days from the due date
for that payment; and
(ii) The creditor does not increase
the rate applicable to the consumer’s account to the penalty rate
if the outstanding balance does not exceed the credit limit on the
date set forth in the notice and described in paragraph (g)(4)(i)(B)
of this section.
(iii) (A) If a notice provided pursuant
to paragraph (g)(4)(i) of this section is included on or with a periodic
statement, the information described in paragraph (g)(4)(i) of this
section must be in the form of a table and provided on the front of
any page of the periodic statement; or
(B) If a notice required by paragraph (g)(4)(i)
of this section is not included on or with a periodic statement, the
information described in paragraph (g)(4)(i) of this section must
be disclosed on the front of the first page of the notice. Only information
related to the reduction in credit limit may be included with the
notice, except that this notice may be combined with a notice
described in paragraph (c)(2)(iv) or (g)(1) of this section.
(h) Consumer rejection of certain significant changes
in terms.
(1) Right to
reject. If paragraph (c)(2)(iv)(B) of this section requires disclosure
of the consumer’s right to reject a significant change to an account
term, the consumer may reject that change by notifying the creditor
of the rejection before the effective date of the change.
(2) Effect of rejection. If a creditor is notified of a rejection
of a significant change to an account term as provided in paragraph
(h)(1) of this section, the creditor must not:
(i) Apply
the change to the account;
(ii) Impose a fee or charge or treat
the account as in default solely as a result of the rejection; or
(iii) Require repayment
of the balance on the account using a method that is less beneficial
to the consumer than one of the methods listed in section 226.55(c)(2).
(3) Exception. Section 226.9(h) does not apply
when the creditor has not received the consumer’s required minimum
periodic payment within 60 days after the due date for that payment.
