The creditor shall
disclose to the consumer, in terminology consistent with that to be used
on the periodic statement, each of the following items, to the extent applicable:
(a) Finance charge. The circumstances under
which a finance charge will be imposed and an explanation of how it will
be determined, as follows:
(1) A statement of when finance charges begin
to accrue, including an explanation of whether or not any time period exists
within which any credit extended may be repaid without incurring a finance
charge. If such a time period is provided, a creditor may, at its option
and without disclosure, impose no finance charge when payment is received
after the time period's expiration.
(2) A disclosure of each periodic rate that
may be used to compute the finance charge, the range of balances to which
it is applicable,11 and the corresponding annual percentage
rate.12 When different periodic rates apply to different types
of transactions, the types of transactions to which the periodic rates
apply shall also be disclosed.
11
A creditor is not required to adjust the range of balances disclosure to
reflect the balance below which only a minimum charge applies.
12
If a creditor is offering a variable rate plan, the creditor shall also
disclose: (1) The circumstances under which the rate(s) may increase; (2)
any limitations on the increase; and (3) the effect(s) of an increase.
(3) An explanation of the method used to determine
the balance on which the finance charge may be computed.
(4) An explanation of how the amount of any
finance charge will be determined,13 including a description
of how any finance charge other than the periodic rate will be determined.
13
If no finance charge is imposed when the outstanding balance is less than
a certain amount, no disclosure is required of that fact or of the balance
below which no finance charge will be imposed.
(b) Other charges. The amount of any charge
other than a finance charge that may be imposed as part of the plan, or
an explanation of how the charge will be determined.
(c) Security interests. The fact that the
creditor has or will acquire a security interest in the property purchased
under the plan, or in other property identified by item or type.
(d) Statement of billing rights. A statement
that outlines the consumer's rights and the creditor's responsibilities
under Secs. 226.12(c) and 226.13 and that is substantially similar to the
statement found in appendix G.
(e) Home equity plan information. The following
disclosures described in Sec. 226.5b(d), as applicable:
(1) A statement of the conditions under which
the creditor may take certain action, as described in Sec. 226.5b(d)(4)(i),
such as terminating the plan or changing the terms.
(2) The payment information described in Sec.
226.5b(d)(5) (i) and (ii) for both the draw period and any repayment period.
(3) A statement that negative amortization
may occur as described in Sec. 226.5b(d)(9).
(4) A statement of any transaction requirements
as described in Sec. 226.5b(d)(10).
(5) A statement regarding the tax implications
as described in Sec. 226.5b(d)(11).
(6) A statement that the annual percentage
rate imposed under the plan does not include costs other than interest
as described in Secs. 226.5b(d)(6) and (d)(12)(ii).
(7) The variable-rate disclosures described
in Sec. 226.5b(d)(12) (viii), (x), (xi), and (xii), as well as the disclosure
described in Sec. 226.5b(d)(5)(iii), unless the disclosures provided with
the application were in a form the consumer could keep and included a representative
payment example for the category of payment option chosen by the consumer.
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