(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) Overdraft lines of credit tied to asset accounts accessed by
check-guarantee cards or by debit cards;
(iii) Lines of credit accessed by check-guarantee
cards or by debit 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;
(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.
