(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.
6-664.1
(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.
6-664.2
(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
226.5b;
(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;
(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.
6-664.3
(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.
(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 226.14(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 226.16(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 226.16(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.
6-664.4
(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 Board to reflect changes
in the Consumer Price Index. The Board 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.
6-664.5
(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 226.4(b)(7) or debt cancellation or suspension coverage described
in section 226.4(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) Website
reference. A reference to the Web site established by the Board
and a statement that consumers may obtain on the Web site information
about shopping for and using credit cards.
6-664.6
(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 e-mail 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 Website. 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 e-mail 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
226.5(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).
6-664.7
(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.
6-664.8
(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.
6-664.9
(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.
6-665
(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.
6-665.1
(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.
6-665.2
(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.
