(a) Furnishing statement of billing rights--(1)
Annual statement. The creditor shall mail or deliver the billing rights
statement required by Sec. 226.6(d) at least once per calendar year, at
intervals of not less than 6 months nor more than 18 months, either to
all consumers or to each consumer entitled to receive a periodic statement
under Sec. 226.5(b)(2) for any one billing cycle.
(2) Alternative summary statement. As an alternative
to paragraph (a)(1) of this section, the creditor may mail or deliver,
on or with each periodic statement, a statement substantially similar to
that in appendix G.
(b) Disclosures for supplemental credit devices
and additional features--(1) If a creditor, within 30 days after mailing
or delivering the initial disclosures under Sec. 226.6(a), adds a credit
feature to the consumer's account or mails or delivers to the consumer
a credit device for which the finance charge terms are the same as those
previously disclosed, no additional disclosures are necessary. After 30
days, if the creditor adds a credit feature or furnishes a credit device
(other than as a renewal, resupply, or the original issuance of a credit
card) on the same finance charge terms, the creditor shall disclose, before
the consumer uses the feature or device for the first time, that it is
for use in obtaining credit under the terms previously disclosed.
(2) Whenever a credit feature is added or
a credit device is mailed or delivered, and the finance charge terms for
the feature or device differ from disclosures previously given, the disclosures
required by Sec. 226.6(a) that are applicable to the added feature or device
shall be given before the consumer uses the feature or device for the first
time.
(c) Change in terms--(1) Rules affecting home-equity plans and
open-end plans that are not credit card accounts. (i) Written notice
required. For home-equity plans subject to the requirements of Sec.
226.5b and other open-end plans that are not credit card accounts,
whenever any term required to be disclosed under Sec. 226.6 is changed
or the required minimum periodic payment is increased, the creditor
shall mail or deliver written notice of the change to each consumer who
may be affected. The notice shall be mailed or delivered at least 15
days prior to the effective date of the change. The 15-day timing
requirement does not apply if the change has been agreed to by the
consumer, or if a periodic rate or other finance charge is increased
because of the consumer's delinquency or default; the notice shall be
given, however, before the effective date of the change.
(ii) Notice not required. For home-equity plans subject to the
requirements of Sec. 226.5b and other open-end plans that are not
credit card accounts, no notice under this section is required when the
change involves late payment charges, charges for documentary evidence,
or over-the-limit charges; a reduction of any component of a finance or
other charge; suspension of future credit privileges or termination of
an account or plan; or when the change results from an agreement
involving a court proceeding, or from the consumer's default or
delinquency (other than an increase in the periodic rate or other
finance charge).
(iii) Notice for home equity plans. If a creditor prohibits
additional extensions of credit or reduces the credit limit applicable
to a home equity plan pursuant to Sec. 226.5b(f)(3)(i) or Sec.
226.5b(f)(3)(vi), the creditor shall mail or deliver written notice of
the action to each consumer who will be affected. The notice must be
provided not later than three business days after the action is taken
and shall contain specific reasons for the action. If the creditor
requires the consumer to request reinstatement of credit privileges,
the notice also shall state that fact.
(2) Rules affecting credit card accounts that are not home-
secured--(i) Changes where written advance notice is required. For
credit card accounts under an open-end (not home-secured) consumer
credit plan, except as provided in paragraph (c)(2)(v) of this section,
whenever a significant change to an account term as described in
paragraph (c)(2)(ii) is made or the required minimum periodic payment
is increased, a creditor must provide a written notice of the change at
least 45 days prior to the effective date of the change to each
consumer who may be affected. The 45-day timing requirement does not
apply if the consumer has agreed to a particular change; the notice
shall be given, however, before the effective date of the change.
(ii) Significant changes in account terms. The notice requirements
of paragraph (c)(2)(i) of this section apply to changes in the
following terms:
(A) Annual percentage rates. 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. For purposes of this paragraph,
such rates include any discounted initial rate, premium initial rate,
or penalty rate that may be applied to the account.
(B) Fees for issuance or availability. Any annual or other periodic
fee that may be imposed for the issuance or availability of a credit
card account under an open-end (not home-secured) consumer credit plan,
including any fee based on account activity or inactivity.
(C) Fixed finance charge; minimum interest charge. Any fixed
finance charge and any minimum interest charge if it exceeds $1.00 that
could be imposed during a billing cycle. The creditor may, at its
option, provide notice in accordance with paragraph (c)(2)(i) of this
section for changes in minimum interest charges below this threshold.
(D) Transaction charges. Any transaction charge imposed by the
creditor for use of the credit card account under an open-end (not
home-secured) consumer credit plan for purchases.
(E) Grace period. The date by which or the period within which any
credit extended may be repaid without incurring a finance charge due to
a periodic interest rate and any conditions on the availability of the
grace period.
(F) Balance computation method. The balance computation method that
is used to determine the balance on which the finance charge is
computed for each feature.
(G) Cash advance fee. Any fee imposed for an extension of credit in
the form of cash or its equivalent.
(H) Late payment fee. Any fee imposed for a late payment.
(I) Over-the-limit fee. Any fee imposed for exceeding a credit
limit.
(J) Balance transfer fee. Any fee imposed to transfer an
outstanding balance.
(K) Returned-payment fee. Any fee imposed by the creditor for a
returned payment.
(L) Required insurance, debt cancellation, or debt suspension
coverage. A fee for insurance described in Sec. 226.4(b)(7), debt cancellation coverage described in Sec.
226.4(b)(10), or debt suspension coverage written in connection with a
credit transaction, if the insurance, debt cancellation coverage, or
debt suspension coverage is required as part of the plan.
(iii) Charges not covered by Sec. 226.9(c)(2)(i). Except as
provided in paragraph (c)(2)(v) of this section, if a creditor
increases any component of a charge on a credit card account under an
open-end (not home-secured) consumer credit plan, or introduces a new
charge, that is not subject to the disclosure requirements under Sec.
226.9(c)(2)(i), a creditor may either, at its option:
(A) Comply with the requirements of paragraph (c)(2)(i) of this
section; or
(B) Provide notice of the amount of the charge before the consumer
agrees to or becomes obligated to pay the charge, at a time and in a
manner that a consumer would be likely to notice the disclosure of the
charge. The notice may be provided orally or in writing.
(iv) Disclosure requirements--changes to terms described in
paragraph (c)(2)(i). If a creditor changes a term described in
paragraph (c)(2)(ii) of this section or increases the required minimum
periodic payment, the creditor must provide the following information
on the notice provided pursuant to paragraph (c)(2)(i) of this section:
(A) A description of the changes made to terms described in
paragraph (c)(2)(ii) of this section or of any increase in the required
minimum periodic payment;
(B) A statement that changes are being made to the account;
(C) The date the changes will become effective; and
(D) Except in the case of an increase in the required minimum
periodic payment:
(1) A statement that the consumer has the right to reject the
change or changes prior to the effective date of the changes, unless
the consumer fails to make a required minimum periodic payment within
60 days after the due date for that payment;
(2) Instructions for rejecting the change or changes, and a toll-
free telephone number that the consumer may use to notify the creditor
of the rejection; and
(3) If applicable, a statement that if the consumer rejects the
change or changes, the consumer's ability to use the account for
further advances will be terminated or suspended.
(v) Notice not required. For credit card accounts under an open-end
(not home-secured) consumer credit plan, a creditor is not required to
provide notice under this section:
(A) When the change involves charges for documentary evidence; a
reduction of any component of a finance or other charge; suspension of
future credit privileges (except as provided in paragraph (c)(2)(vi) of
this section) or termination of an account or plan; or when the change
results from an agreement involving a court proceeding;
(B) When the change is an increase in an annual percentage rate
upon the expiration of a specified period of time, provided that:
(1) Prior to commencement of that period, the creditor disclosed in
writing to the consumer, in a clear and conspicuous manner, the length
of the period and the annual percentage rate that would apply after
expiration of the period; and
(2) The annual percentage rate that applies after that period does
not exceed the rate disclosed pursuant to paragraph (c)(2)(v)(B)(1) of
this paragraph.
(C) When the change is an increase in a variable annual percentage
rate in accordance with a credit card agreement that provides for
changes in the rate according to operation of an index that is not
under the control of the creditor and is available to the general
public; or
(D) When the change is an increase in an annual percentage rate due
to the completion of a workout or temporary hardship arrangement by the
consumer, provided that:
(1) The annual percentage rate applicable to a category of
transactions following any such increase does not exceed the rate that
applied to that category of transactions prior to commencement of the
arrangement or, if the rate that applied to a category of transactions
prior to the commencement of the workout or temporary hardship
arrangement was a variable rate, the rate following any such increase
is a variable rate determined by the same formula (index and margin)
that applied to the category of transactions prior to commencement of
the workout or temporary hardship arrangement; and
(2) The creditor has provided the consumer, prior to the
commencement of such arrangement, with a clear and conspicuous written
disclosure of the terms of the arrangement (including any increases due
to such completion).
(vi) Reduction of the credit limit. For credit card accounts under
an open-end (not home-secured) consumer credit plan, if a creditor
decreases the credit limit on an account, advance notice of the
decrease must be provided before an over-the-limit fee or a penalty
rate can be imposed solely as a result of the consumer exceeding the
newly decreased credit limit. Notice shall be provided in writing or
orally at least 45 days prior to imposing the over-the-limit fee or
penalty rate and shall state that the credit limit on the account has
been or will be decreased.
(d) Finance charge imposed at time of transaction.
(1) Any person, other than the card issuer, who imposes a finance charge
at the time of honoring a consumer's credit card, shall disclose the amount
of that finance charge prior to its imposition.
(2) The card issuer, if other than the person
honoring the consumer's credit card, shall have no responsibility for the
disclosure required by paragraph (d)(1) of this section, and shall not
consider any such charge for purposes of Secs. 226.5a, 226.6 and 226.7.
(e) Disclosures upon renewal of credit or
charge card. (1) Notice prior to renewal. Except as provided in paragraph
(e)(2) of this section, a card issuer that imposes any annual or other
periodic fee to renew a credit or charge card account of the type subject
to Sec. 226.5a, including any fee based on account activity or inactivity,
shall mail or deliver written notice of the renewal to the cardholder.
The notice shall be provided at least 30 days or one billing cycle, whichever
is less, before the mailing or the delivery of the periodic statement on
which the renewal fee is initially charged to the account. The notice shall
contain the following information:
(i) The disclosures contained in Sec. 226.5a(b)
(1) through (7) that would apply if the account were renewed;20a
and
20
a These disclosures need not be provided in tabular format or in a prominent
location.
(ii) How and when the cardholder may terminate
credit availability under the account to avoid paying the renewal fee.
(2) Delayed notice. The disclosures required
by paragraph (e)(1) of this section may be provided later than the time
in paragraph (e)(1) of this section, but no later than the mailing or the
delivery of the periodic statement on which the renewal fee is initially
charged to the account, if the card issuer also discloses at that time
that:
(i) The cardholder has 30 days from the time
the periodic statement is mailed or delivered to avoid paying the fee or
to have the fee recredited if the cardholder terminates credit availability
under the account; and
(ii) The cardholder may use the card during
the interim period without having to pay the fee.
(3) Notification on periodic statements. The
disclosures required by this paragraph may be made on or with a periodic
statement. If any of the disclosures are provided on the back of a periodic
statement, the card issuer shall include a reference to those disclosures
on the front of the statement.
(f) Change in credit card account insurance
provided--(1) Notice prior to change. If a credit card issuer plans to
change the provider of insurance for repayment of all or part of the outstanding
balance of an open-end credit card account of the type subject to Sec.
226.5a, the card issuer shall mail or deliver the cardholder written notice
of the change not less than 30 days before the change in providers occurs.
The notice shall also include the following items, to the extent applicable:
(i) Any increase in the rate that will result
from the change;
(ii) Any substantial decrease in coverage
that will result from the change; and
(iii) A statement that the cardholder may
discontinue the insurance.
(2) Notice when change in provider occurs.
If a change described in paragraph (f)(1) of this section occurs, the card
issuer shall provide the cardholder with a written notice no later than
30 days after the change, including the following items, to the extent
applicable:
(i) The name and address of the new insurance
provider;
(ii) A copy of the new policy or group certificate
containing the basic terms of the insurance, including the rate to be charged;
and
(iii) A statement that the cardholder may
discontinue the insurance.
(3) Substantial decrease in coverage. For
purposes of this paragraph, a substantial decrease in coverage is a decrease
in a significant term of coverage that might reasonably be expected to
affect the cardholder's decision to continue the insurance. Significant
terms of coverage include, for example, the following:
(i) Type of coverage provided;
(ii) Age at which coverage terminates or becomes
more restrictive;
(iii) Maximum insurable loan balance, maximum
periodic benefit payment, maximum number of payments, or other term affecting
the dollar amount of coverage or benefits provided;
(iv) Eligibility requirements and number and
identity of persons covered;
(v) Definition of a key term of coverage such
as disability;
(vi) Exclusions from or limitations on coverage;
and
(vii) Waiting periods and whether coverage
is retroactive.
(4) Combined notification. The notices required
by paragraph (f) (1) and (2) of this section may be combined provided the
timing requirement of paragraph (f)(1) of this section is met. The notices
may be provided on or with a periodic statement.
(g) Increase in rates due to delinquency or default or as a
penalty--(1) Increases subject to this section. For credit card
accounts under an open-end (not home-secured) consumer credit plan,
except as provided in paragraph (g)(4) of this section, a creditor must
provide a written notice to each consumer who may be affected when:
(i) A rate is increased due to the consumer's delinquency or
default; or
(ii) A rate is increased as a penalty for one or more events
specified in the account agreement, such as making a late payment or
obtaining an extension of credit that exceeds the credit limit.
(2) Timing of written notice. Whenever any notice is required to be
given pursuant to paragraph (g)(1) of this section, the creditor shall
provide written notice of the increase in rate at least 45 days prior
to the effective date of the increase. The notice must be provided
after the occurrence of the events described in paragraphs (g)(1)(i)
and (g)(1)(ii) of this section that trigger the imposition of the rate
increase.
(3) Disclosure requirements for rate increases. If a creditor is
increasing the rate due to delinquency or default or as a penalty, the
creditor must provide the following information on the notice sent
pursuant to paragraph (g)(1) of this section:
(i) A statement that the delinquency or default rate or penalty
rate, as applicable, has been triggered;
(ii) The date on which the delinquency or default rate or penalty
rate will apply;
(iii) The circumstances under which the delinquency or default rate
or penalty rate, as applicable, will cease to apply to the consumer's
account, or that the delinquency or default rate or penalty rate will
remain in effect for a potentially indefinite time period;
(iv) A statement that the consumer has the right to reject the
increase in the annual percentage rate prior to the effective date of
that increase, unless the consumer fails to make a required minimum
periodic payment within 60 days after the due date for that payment;
(v) Instructions for rejecting the change or changes, and a toll-
free telephone number that the consumer may use to notify the creditor
of the rejection; and
(vi) If applicable, a statement that if the consumer rejects the
change or changes, the consumer's ability to use the account for
further advances will be terminated or suspended.
(4) Exceptions--(i) Workout or temporary hardship arrangements. A
creditor is not required to provide a notice pursuant to paragraph
(g)(1) of this section if a rate applicable to a category of
transactions is increased as a result of the consumer's default,
delinquency or as a penalty, in each case for failure to comply with
the terms of a workout or temporary hardship arrangement between the
creditor and the consumer, provided that:
(A) The rate following any such increase does not exceed the rate
that applied to the category of transactions prior to commencement of
the workout or temporary hardship arrangement or, if the rate that
applied to a category of transactions prior to the commencement of the
workout or temporary hardship arrangement was a variable rate, the rate
following any such increase is a variable rate determined by the same
formula (index and margin) that applied to the category of transactions
prior to commencement of the workout or temporary hardship arrangement;
and
(B) The creditor has provided the consumer, prior to the
commencement of such arrangement, with a clear and conspicuous written
disclosure of the terms of the arrangement (including any increases due
to such failure).
(ii) Decrease in credit limit. A creditor is not required to
provide, prior to increasing the rate for obtaining an extension of
credit that exceeds the credit limit, a notice pursuant to paragraph
(g)(1) of this section, provided that:
(A) The creditor provides at least 45 days in advance of imposing
the penalty rate a notice, in writing, that includes:
(1) A statement that the credit limit on the account has been or
will be decreased;
(2) A statement indicating the date on which the penalty rate will
apply, if the outstanding balance exceeds the credit limit as of that
date;
(3) A statement that the penalty rate will not be imposed on the
date specified in paragraph (g)(4)(ii)(A)(2) of this section, if the
outstanding balance does not exceed the credit limit as of that date;
(4) The circumstances under which the penalty rate, if applied,
will cease to apply to the account, or that the penalty rate, if
applied, will remain in effect for a potentially indefinite time
period; and
(B) The creditor does not increase the rate applicable to the
consumer's account to the penalty rate if the outstanding balance does
not exceed the credit limit on the date set forth in the notice and
described in paragraph (g)(4)(ii)(A)(2) of this section.
(h) Consumer rejection of significant change in terms or increase
in annual percentage rate--(1) Right to reject. If paragraph (c)(2)(iv)
or (g)(3) of this section requires disclosure of the consumer's right
to reject a significant change to an account term or other increase in
an annual percentage rate, the consumer may reject that change or
increase by notifying the creditor of the rejection before the
effective date of the change or increase.
(2) Effect of rejection. If a creditor is notified of a rejection
of a significant change to an account term or other increase in an
annual percentage rate as provided in paragraph (h)(1) of this section,
the creditor must not:
(i) Apply the change or increase to the account;
(ii) Impose a fee or charge or treat the account as in default
solely as a result of the rejection; or
(iii) Require repayment of the balance on the account using a
method that is less beneficial to the consumer than one of the
following methods:
(A) The method of repayment for the account on the date on which
the creditor was notified of the rejection;
(B) An amortization period of not less than five years, beginning
no earlier than the date on which the creditor was notified of the
rejection; or
(C) A required minimum periodic payment that includes a percentage
of the balance that is equal to no more than twice the percentage
required on the date on which the creditor was notified of the
rejection.
(3) Exceptions. This section does not apply:
(i) When the creditor has not received the consumer's required
minimum periodic payment within 60 days after the due date for that
payment; or
(ii) To transactions that occur more than 14 days after provision
of the notice required by paragraphs (c) or (g) of this section.
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