(a) General rules. The card issuer shall provide the disclosures
required under this section on or with a solicitation or an application
to open a credit or charge card account.
(1) Definition
of solicitation. For purposes of this section, the term solicitation
means an offer by the card issuer to open a credit or charge card
account that does not require the consumer to complete an application.
A “firm offer of credit” as defined in section 603(l) of the Fair Credit Reporting Act (15 U.S.C. 1681a(l)) for a credit or charge card is a solicitation for purposes of
this section.
6-5976.1
(2) Form of disclosures; tabular format.
(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.
(ii) The table described in paragraph
(a)(2)(i) of this section shall contain only the information required
or permitted by this section. Other information may be presented on
or with an application or solicitation, provided such information
appears outside the required table.
(iii) Disclosures required by paragraphs
(b)(1)(iv)(B), (b)(1)(iv)(C) and (b)(6) of this section must be placed
directly beneath the table.
(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. However, bold text shall not be used for: The amount
of any periodic fee disclosed pursuant to paragraph (b)(2) of this
section that is not an annualized amount; and other annual percentage
rates or fee amounts disclosed in the table.
(v) For an application or a solicitation
that is accessed by the consumer in electronic form, the disclosures
required under this section may be provided to the consumer in electronic
form on or with the application or solicitation.
(vi) (A)
Except as provided in paragraph (a)(2)(vi)(B) of this section, the
table described in paragraph (a)(2)(i) of this section must be provided
in a prominent location on or with an application or a solicitation.
(B) If the table described
in paragraph (a)(2)(i) of this section is provided electronically,
it must be provided in close proximity to the application or solicitation.
6-5976.2
(3) Fees based
on a percentage. If the amount of any fee required to be disclosed
under this section is determined on the basis of a percentage of another
amount, the percentage used and the identification of the amount against
which the percentage is applied may be disclosed instead of the amount
of the fee.
(4) Fees that vary by state. Card issuers that
impose fees referred to in paragraphs (b)(8) through (12) of this
section that vary by state may, at the issuer’s option, disclose
in the table required by paragraph (a)(2)(i) of this section: The
specific fee applicable to the consumer’s account; or the range
of the fees, if the disclosure includes a statement that the amount
of the fee varies by state and refers the consumer to a disclosure
provided with the table where the amount of the fee applicable to
the consumer’s account is disclosed. A card issuer may not list
fees for multiple states in the table.
(5) Exceptions. This section does not apply to:
(i) Home-equity plans accessible
by a credit or charge card that are subject to the requirements of
section 1026.40;
(ii) Covered overdraft credit as defined in section 1026.62 tied
to asset accounts accessed by check-guarantee cards or by debit cards
other than hybrid debit-credit cards as defined in section 1026.62;
(iii) Lines of credit
accessed by check-guarantee cards or by debit cards, other than covered
overdraft credit accessed by hybrid debit-credit cards, that can be
used only at automated teller machines;
(iv) Lines of credit accessed solely
by account numbers except for a covered separate credit feature solely
accessible by an account number that is a hybrid prepaid-credit card
as defined in section 1026.61 or covered overdraft credit accessible
by an account number that is a hybrid debit-credit card;
(v) Additions of a credit
or charge card to an existing open-end plan;
(vi) General purpose applications unless
the application, or material accompanying it, indicates that it can
be used to open a credit or charge card account; or
(vii) Consumer-initiated requests for
applications.
6-5976.3
(b) Required disclosures. The card
issuer shall disclose the items in this paragraph on or with an application
or a solicitation in accordance with the requirements of paragraphs
(c), (d), (e)(1), or (f) of this section. A credit card issuer shall
disclose all applicable items in this paragraph except for paragraph
(b)(7) of this section. A charge card issuer shall disclose the applicable
items in paragraphs (b)(2), (4), (7) through (12), and (15) of this
section. With respect to a covered separate credit feature that is
a charge card account accessible by a hybrid prepaid-credit card as
defined in section 1026.61, a charge card issuer also shall disclose
the applicable items in paragraphs (b)(3), (13), and (14) of this
section.
(1) Annual percentage rate. Each periodic rate that may be used
to compute the finance charge on an outstanding balance for purchases,
a cash advance, or a balance transfer, expressed as an annual percentage
rate (as determined by section 1026.14(b)). When more than one rate
applies for a category of transactions, the range of balances to which
each rate is applicable shall also be disclosed. 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.
(i) Variable rate information. If a rate disclosed
under paragraph (b)(1) 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.
(ii) Discounted initial rate. If the initial
rate is an introductory rate, as that term is defined in section 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. The card issuer also
must disclose the rate that would otherwise apply to the account pursuant
to paragraph (b)(1) of this section. Where the rate is not tied to
an index or formula, the card issuer must disclose the rate that will
apply after the introductory rate expires. In a variable-rate account,
the card issuer must disclose a rate based on the applicable index
or formula in accordance with the accuracy requirements set forth
in paragraphs (c)(2), (d)(3), or (e)(4) of this section, as applicable.
(iii) Premium initial rate. If the initial rate
is temporary and is higher than the rate that will apply after the
temporary rate expires, the card issuer must disclose the premium
initial rate pursuant to paragraph (b)(1) of this section and the
time period during which the premium initial rate will remain in effect.
Consistent with paragraph (b)(1) of this section, the premium initial
rate for purchases must be in at least 16-point type. The issuer must
also disclose in the table the rate that will apply after the premium
initial rate expires, in at least 16-point type.
(iv) Penalty
rates.
(A) In general. 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.
(B) Introductory rates. If the issuer
discloses an introductory rate, as that term is defined in section
1026.16(g)(2)(ii), in the table or in any written or electronic promotional
materials accompanying applications or solicitations subject to paragraph
(c) or (e) of this section, the issuer must briefly disclose directly
beneath the table the circumstances, if any, under which the introductory
rate may be revoked, and the type of rate that will apply after the
introductory rate is revoked.
(C) Employee preferential rates. 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.
(v) Rates
that depend on consumer’s creditworthiness. If a rate cannot
be determined at the time disclosures are given because the rate depends,
at least in part, on a later determination of the consumer’s
creditworthiness, the card issuer must disclose the specific rates
or the range of rates that could apply and a statement that the rate
for which the consumer may qualify at account opening will depend
on the consumer’s creditworthiness, and other factors if applicable.
If the rate that depends, at least in part, on a later determination
of the consumer’s creditworthiness is a penalty rate, as described
in paragraph (b)(1)(iv) of this section, the card issuer at its option
may disclose the highest rate that could apply, instead of disclosing
the specific rates or the range of rates that could apply.
(vi) APRs that vary by state. Issuers imposing
annual percentage rates that vary by state may, at the issuer’s
option, disclose in the table: the specific annual percentage rate
applicable to the consumer’s account; or the range of the annual
percentage rates, if the disclosure includes a statement that the
annual percentage rate varies by state and refers the consumer to
a disclosure provided with the table where the annual percentage rate
applicable to the consumer’s account is disclosed. A card issuer
may not list annual percentage rates for multiple states in the table.
6-5976.4
(2) Fees for issuance or availability.
(i) Any annual or other
periodic fee that may be imposed for the issuance or availability
of a credit or charge card, including any fee based on account activity or
inactivity; how frequently it will be imposed; and the annualized
amount of the fee.
(ii) Any non-periodic fee that relates to opening an account. A card
issuer must disclose that the fee is a one-time fee.
(3) Fixed finance charge; minimum interest charge. Any fixed finance charge and a brief description of the charge.
Any minimum interest charge if it exceeds $1.00 that could be imposed
during a billing cycle, and a brief description of the charge. The
$1.00 threshold amount shall be adjusted periodically by the Bureau
to reflect changes in the Consumer Price Index. 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. When the cumulative
change in the adjusted minimum value derived from applying the annual
Consumer Price level to the current minimum interest charge threshold
has risen by a whole dollar, the minimum interest charge will be increased
by $1.00. The issuer may, at its option, disclose in the table minimum
interest charges below this threshold.
(4) Transaction
charges. Any transaction charge imposed by the card issuer for
the use of the card for purchases.
(5) Grace period. The date by which or the period within which any credit extended
for purchases may be repaid without incurring a finance charge due
to a periodic interest rate and any conditions on the availability
of the grace period. If no grace period is provided, that fact must
be disclosed. If the length of the grace period varies, the card issuer
may disclose the range of days, the minimum number of days, or the
average number of days in the grace period, if the disclosure is identified
as a range, minimum, or average. In disclosing in the tabular format
a grace period that applies to all types of purchases, the phrase
“How to Avoid Paying Interest on Purchases” shall be used
as the heading for the row describing the grace period. If a grace
period is not offered on all types of purchases, in disclosing this
fact in the tabular format, the phrase “Paying Interest”
shall be used as the heading for the row describing this fact.
6-5976.5
(6) Balance computation method. The name of
the balance computation method listed in paragraph (g) of this section
that is used to determine the balance for purchases on which the finance
charge is computed, or an explanation of the method used if it is
not listed. In determining which balance computation method to disclose,
the card issuer shall assume that credit extended for purchases will
not be repaid within the grace period, if any.
(7) Statement
on charge card payments. A statement that charges incurred by
use of the charge card are due when the periodic statement is received.
(8) Cash advance fee. Any fee imposed for an
extension of credit in the form of cash or its equivalent.
(9) Late payment fee. Any fee imposed for a late payment.
(10) Over-the-limit fee. Any fee imposed for exceeding a credit limit.
(11) Balance transfer fee. Any fee imposed to
transfer an outstanding balance.
(12) Returned-payment
fee. Any fee imposed by the card issuer for a returned payment.
(13) Required insurance, debt cancellation or debt
suspension coverage.
(i) A fee for insurance described in
section 1026.4(b)(7) or debt cancellation or suspension coverage described
in section 1026.4(b)(10), if the insurance or debt cancellation or
suspension coverage is required as part of the plan; and
(ii) A cross reference
to any additional information provided about the insurance or coverage
accompanying the application or solicitation, as applicable.
(14) Available credit. If a card issuer requires
fees for the issuance or availability of credit described in paragraph
(b)(2) of this section, or requires a security deposit for such credit,
and the total amount of those required fees and/or security deposit
that will be imposed and charged to the account when the account is
opened is 15 percent or more of the minimum credit limit for
the card, a card issuer must disclose the available credit remaining
after these fees or security deposit are debited to the account, assuming
that the consumer receives the minimum credit limit. In determining
whether the 15 percent threshold test is met, the issuer must only
consider fees for issuance or availability of credit, or a security
deposit, that are required. If fees for issuance or availability are
optional, these fees should not be considered in determining whether
the disclosure must be given. Nonetheless, if the 15 percent threshold
test is met, the issuer in providing the disclosure must disclose
the amount of available credit calculated by excluding those optional
fees, and the available credit including those optional fees. This
paragraph does not apply with respect to fees or security deposits
that are not debited to the account.
(15) Web site
reference. A reference to the Web site established by the Bureau
and a statement that consumers may obtain on the Web site information
about shopping for and using credit cards. 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.
6-5976.6
(c) Direct mail and electronic
applications and solicitations.
(1) General. The card issuer shall disclose the applicable items in paragraph
(b) of this section on or with an application or solicitation that
is mailed to consumers or provided to consumers in electronic form.
(2) Accuracy.
(i) Disclosures in
direct mail applications and solicitations must be accurate as of
the time the disclosures are mailed. An accurate variable annual percentage
rate is one in effect within 60 days before mailing.
(ii) Disclosures provided in electronic
form must be accurate as of the time they are sent, in the case of
disclosures sent to a consumer’s email address, or as of the
time they are viewed by the public, in the case of disclosures made
available at a location such as a card issuer’s Web site. An
accurate variable annual percentage rate provided in electronic form
is one in effect within 30 days before it is sent to a consumer’s
email address, or viewed by the public, as applicable.
(d) Telephone
applications and solicitations.
(1) Oral disclosure. The card issuer shall disclose orally the information in paragraphs
(b)(1) through (7) and (b)(14) of this section, to the extent applicable,
in a telephone application or solicitation initiated by the card issuer.
(2) Alternative disclosure. The oral disclosure
under paragraph (d)(1) of this section need not be given if the card
issuer either:
(i) (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
section 1026.5(b)(1)(iv); and
(ii) The card issuer discloses in writing
within 30 days after the consumer requests the card (but in no event
later than the delivery of the card) the following:
(A) The applicable
information in paragraph (b) of this section; and
(B) As applicable, the fact that the consumer
has the right to reject the plan and not be obligated to pay fees
described in paragraph (b)(2) or any other fees or charges until the
consumer has used the account or made a payment on the account after
receiving a billing statement.
(3) Accuracy.
(i) The oral disclosures under paragraph
(d)(1) of this section must be accurate as of the time they are given.
(ii) The alternative
disclosures under paragraph (d)(2) of this section generally must
be accurate as of the time they are mailed or delivered. A variable
annual percentage rate is one that is accurate if it was:
(A) In effect
at the time the disclosures are mailed or delivered; or
(B) In effect as of a specified
date (which rate is then updated from time to time, but no less frequently
than each calendar month).
6-5976.7
(e) Applications and solicitations
made available to general public. The card issuer shall provide
disclosures, to the extent applicable, on or with an application or
solicitation that is made available to the general public, including
one contained in a catalog, magazine, or other generally available
publication. The disclosures shall be provided in accordance with
paragraph (e)(1) or (e)(2) of this section.
(1) Disclosure
of required credit information. The card issuer may disclose
in a prominent location on the application or solicitation the following:
(i) The applicable information in paragraph (b) of this section;
(ii) The date the
required information was printed, including a statement that the required
information was accurate as of that date and is subject to change
after that date; and
(iii) A statement that the consumer should contact the card issuer
for any change in the required information since it was printed, and
a toll-free telephone number or a mailing address for that purpose.
6-5976.8
(2) No disclosure of credit information. If
none of the items in paragraph (b) of this section is provided on
or with the application or solicitation, the card issuer may state
in a prominent location on the application or solicitation the following:
(i) There are costs associated with the use of the card; and
(ii) The consumer may contact
the card issuer to request specific information about the costs, along
with a toll-free telephone number and a mailing address for that purpose.
(3) Prompt response to requests for information. Upon receiving a request for any of the information referred to
in this paragraph, the card issuer shall promptly and fully disclose
the information requested.
(4) Accuracy. The disclosures given
pursuant to paragraph (e)(1) of this section must be accurate as of
the date of printing. A variable annual percentage rate is accurate
if it was in effect within 30 days before printing.
6-5976.9
(f) In-person applications
and solicitations. 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. 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.
6-5977
(g) Balance computation methods
defined. The following methods may be described by name. Methods
that differ due to variations such as the allocation of payments,
whether the finance charge begins to accrue on the transaction date
or the date of posting the transaction, the existence or length of
a grace period, and whether the balance is adjusted by charges such
as late payment fees, annual fees and unpaid finance charges do not
constitute separate balance computation methods.
6-5977.1
(1) (i) Average daily balance (including new purchases). 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.
(ii) Average daily balance (excluding new purchases). This balance is figured by adding the outstanding balance (excluding
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.
6-5977.2
(2) Adjusted
balance. 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.
(3) Previous
balance. This balance is the outstanding balance at the beginning
of the billing cycle.
(4) Daily balance. For each day in
the billing cycle, this balance is figured by taking the beginning
balance each day, adding any new purchases, and subtracting any payment
and credits.
