(a) Definitions. For purposes of this regulation,
the following definitions apply:
(1) Act means the Truth in Lending Act (15
U.S.C. 1601 et seq.).
(2) Advertisement means a commercial message
in any medium that promotes, directly or indirectly, a credit transaction.
(3) [Reserved]
(4) Billing cycle or cycle means the interval
between the days or dates of regular periodic statements. These intervals
shall be equal and no longer than a quarter of a year. An interval will
be considered equal if the number of days in the cycle does not vary more
than 4 days from the regular day or date of the periodic statement.
(5) Board means the Board of Governors of
the Federal Reserve System.
(6) Business day means a day on which the
creditor's offices are open to the public for carrying on substantially
all of its business functions. However, for purposes of rescission under
Secs. 226.15 and 226.23, and for purposes of Sec. 226.31, the term means
all calendar days except Sundays and the legal public holidays specified
in 5 U.S.C. 6103(a), such as New Year's Day, the Birthday of Martin Luther
King, Jr., Washington's Birthday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.
Effective 10/1/2009, paragraph (a)(6) is amended to read as follows:
(6) Business day means a day on which the creditor's offices are open to the public for carrying on substantially all of its business functions. However, for purposes of rescission under Secs. 226.15 and 226.23, and for purposes of Sec. 226.19(a)(1)(ii) and Sec. 226.31, the term means all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a), such as New Year's Day, the Birthday of Martin Luther King,
Jr., Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.
(7) Card issuer means a person that issues
a credit card or that person's agent with respect to the card.
(8) Cardholder means a natural person to whom
a credit card is issued for consumer credit purposes, or a natural person
who has agreed with the card issuer to pay consumer credit obligations
arising from the issuance of a credit card to another natural person. For
purposes of Sec. 226.12(a) and (b), the term includes any person to whom
a credit card is issued for any purpose, including business, commercial,
or agricultural use, or a person who has agreed with the card issuer to
pay obligations arising from the issuance of such a credit card to another
person.
(9) Cash price means the price at which a
creditor, in the ordinary course of business, offers to sell for cash the
property or service that is the subject of the transaction. At the creditor's
option, the term may include the price of accessories, services related
to the sale, service contracts and taxes and fees for license, title, and
registration. The term does not include any finance charge.
(10) Closed-end credit means consumer credit
other than open-end credit as defined in this section.
(11) Consumer means a cardholder or a natural
person to whom consumer credit is offered or extended. However, for purposes
of rescission under Secs. 226.15 and 226.23, the term also includes a natural
person in whose principal dwelling a security interest is or will be retained
or acquired, if that person's ownership interest in the dwelling is or
will be subject to the security interest.
(12) Consumer credit means credit offered
or extended to a consumer primarily for personal, family, or household
purposes.
(13) Consummation means the time that a consumer
becomes contractually obligated on a credit transaction.
(14) Credit means the right to defer payment
of debt or to incur debt and defer its payment.
(15) Credit card means any card, plate, coupon
book, or other single credit device that may be used from time to time
to obtain credit. Charge card means a credit card on an account for which
no periodic rate is used to compute a finance charge.
(16) Credit sale means a sale in which the
seller is a creditor. The term includes a bailment or lease (unless terminable
without penalty at any time by the consumer) under which the consumer:
(i) Agrees to pay as compensation for use
a sum substantially equivalent to, or in excess of, the total value of
the property and services involved; and
(ii) Will become (or has the option to become),
for no additional consideration or for nominal consideration, the owner
of the property upon compliance with the agreement.
(17) Creditor means: (i) A person (A) who
regularly extends consumer credit3 that is subject to a finance
charge or is payable by written agreement in more than 4 installments (not
including a downpayment), and (B) to whom the obligation is initially payable,
either on the face of the note or contract, or by agreement when there
is no note or contract.
3
A person regularly extends consumer credit only if it extended credit (other
than credit subject to the requirements of Sec. 226.32) more than 25 times
(or more than 5 times for transactions secured by a dwelling) in the preceding
calendar year. If a person did not meet these numerical standards in the
preceding calendar year, the numerical standards shall be applied to the
current calendar year. A person regularly extends consumer credit if, in
any 12-month period, the person originates more than one credit extension
that is subject to the requirements of Sec. 226.32 or one or more such
credit extensions through a mortgage broker.
(ii) For purposes of Secs. 226.4(c)(8) (discounts),
226.9(d) (Finance charge imposed at time of transaction), and 226.12(e)
(Prompt notification of returns and crediting of refunds), a person that
honors a credit card.
(iii) For purposes of subpart B, any card
issuer that extends either open-end credit or credit that is not subject
to a finance charge and is not payable by written agreement in more than
4 installments.
(iv) For purposes of subpart B (except for
the credit and charge card disclosures contained in Secs. 226.5(a) and
226.9 (e) and (f), the finance charge disclosures contained in Secs. 226.6(a)
and 226.7 (d) through (g) and the right of rescission set forth in Sec.
226.15) and subpart C, any card issuer that extends closed-end credit that
is subject to a finance charge or is payable by written agreement in more
than 4 installments.
(18) Downpayment means an amount, including
the value of any property used as a trade-in, paid to a seller to reduce
the cash price of goods or services purchased in a credit sale transaction.
A deferred portion of a downpayment may be treated as part of the downpayment
if it is payable not later than the due date of the second otherwise regularly
scheduled payment and is not subject to a finance charge.
(19) Dwelling means a residential structure
that contains 1 to 4 units, whether or not that structure is attached to
real property. The term includes an individual condominium unit, cooperative
unit, mobile home, and trailer, if it is used as a residence.
(20) Open-end credit means consumer credit
extended by a creditor under a plan in which:
(i) The creditor reasonably contemplates repeated
transactions;
(ii) The creditor may impose a finance charge
from time to time on an outstanding unpaid balance; and
(iii) The amount of credit that may be extended
to the consumer during the term of the plan (up to any limit set by the
creditor) is generally made available to the extent that any outstanding
balance is repaid.
(21) Periodic rate means a rate of finance
charge that is or may be imposed by a creditor on a balance for a day,
week, month, or other subdivision of a year.
(22) Person means a natural person or an organization,
including a corporation, partnership, proprietorship, association, cooperative,
estate, trust, or government unit.
(23) Prepaid finance charge means any finance
charge paid separately in cash or by check before or at consummation of
a transaction, or withheld from the proceeds of the credit at any time.
(24) Residential mortgage transaction means
a transaction in which a mortgage, deed of trust, purchase money security
interest arising under an installment sales contract, or equivalent consensual
security interest is created or retained in the consumer's principal dwelling
to finance the acquisition or initial construction of that dwelling.
(25) Security interest means an interest in
property that secures performance of a consumer credit obligation and that
is recognized by State or Federal law. It does not include incidental interests
such as interests in proceeds, accessions, additions, fixtures, insurance
proceeds (whether or not the creditor is a loss payee or beneficiary),
premium rebates, or interests in after-acquired property. For purposes
of disclosure under Secs. 226.6 and 226.18, the term does not include an
interest that arises solely by operation of law. However, for purposes
of the right of rescission under Secs. 226.15 and 226.23, the term does
include interests that arise solely by operation of law.
(26) State means any state, the District of
Columbia, the Commonwealth of Puerto Rico, and any territory or possession
of the United States.
(b) Rules of construction. For purposes of
this regulation, the following rules of construction apply:
(1) Where appropriate, the singular form of
a word includes the plural form and plural includes singular.
(2) Where the words obligation and transaction
are used in this regulation, they refer to a consumer credit obligation
or transaction, depending upon the context. Where the word credit is used
in this regulation, it means consumer credit unless the context clearly
indicates otherwise.
(3) Unless defined in this regulation, the
words used have the meanings given to them by state law or contract.
(4) Footnotes have the same legal effect as
the text of the regulation.
(5) Where the word ``amount'' is used in this regulation to
describe disclosure requirements, it refers to a numerical amount.
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