(a) Limitations 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 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 1026.9.
(ii) Safe
harbors. Except as provided in paragraph (b)(1)(ii)(E) of this
section, a card issuer may impose a fee for a late payment on an account
if the dollar amount of the fee does not exceed $8. A card issuer
may impose a fee for other types of violations of the terms or other
requirements of an account if the dollar amount of the fee does not
exceed, as applicable:
(A) $32;
(B) $43 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, notwithstanding the limitation on the amount of a late payment
fee in paragraph (b)(1)(ii) of this section.
(D) The amounts in paragraphs (b)(1)(ii)(A)
and (B) of this section will be adjusted annually by the Bureau to
reflect changes in the Consumer Price Index.
(E) A smaller card issuer, as defined in paragraph
(b)(3) of this section, may impose a fee for a late payment on an
account if the dollar amount of the fee does not exceed the amount
in paragraph (b)(1)(ii)(A) or (B) of this section, as applicable,
notwithstanding the limitation on the amount of a late payment fee
in this paragraph (b)(1)(ii).
(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.
(3) Smaller card
issuer.
(i) Except as provided in paragraph
(b)(3)(ii) of this section, a card issuer is a smaller card issuer
for purposes of paragraph (b)(1)(ii)(E) of this section if the card
issuer together with its affiliates had fewer than one million open
credit card accounts, as defined in section 1026.58(b)(6), for the
entire preceding calendar year. For purposes of this paragraph (b)(3), affiliate means any company that controls, is controlled by,
or is under common control with another company, as set forth in the
Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.).
(ii) If a card issuer
together with its affiliates had fewer than one million open credit
card accounts for the entire preceding calendar year but meets or
exceeds that number of open credit card accounts in the current calendar
year, the card issuer will no longer be a smaller card issuer for
purposes of paragraph (b)(1)(ii)(E) of this section as of 60 days
after meeting or exceeding that number of open credit card accounts.
