Regulation Z — Truth in Lending
Supplement I to Part 226—Official Staff Interpretations
Section 226.7—Periodic Statement
1. Multifeatured plans. Some plans involve a number of different features, such
as purchases, cash advances, or overdraft checking. Groups of transactions subject to
different finance charge terms because of the dates on which the transactions took place
are treated like different features for purposes of disclosures on the periodic statements.
The commentary includes additional guidance for multifeatured plans.
7(a) Rules affecting home-equity plans.
7(a)(1) Previous balance.
1. Credit balances. If the previous balance is a credit balance, it must be disclosed in such a way so as to inform the consumer that it is a credit balance, rather than a debit balance.
2. Multifeatured plans. In a multifeatured plan, the previous balance may be
disclosed either as an aggregate balance for the account or as separate balances for each
feature (for example, a previous balance for purchases and a previous balance for cash
advances). If separate balances are disclosed, a total previous balance is optional.
3. Accrued finance charges allocated from payments. Some open-end credit
plans provide that the amount of the finance charge that has accrued since the consumer’s
last payment is directly deducted from each new payment, rather than being separately added to each statement and reflected as an increase in the obligation. In such a plan, the
previous balance need not reflect finance charges accrued since the last payment.
7(a)(2) Identification of transactions.
1. Multifeatured plans. In identifying transactions under § 226.7(a)(2) for
multifeatured plans, creditors may, for example, choose to arrange transactions by feature
(such as disclosing sale transactions separately from cash advance transactions) or in
some other clear manner, such as by arranging the transactions in general chronological
order.
2. Automated teller machine (ATM) charges imposed by other institutions in shared or interchange systems. A charge imposed on the cardholder by an institution
other than the card issuer for the use of the other institution’s ATM in a shared or
interchange system and included by the terminal-operating institution in the amount of
the transaction need not be separately disclosed on the periodic statement.
7(a)(3) Credits.
1. Identification—sufficiency. The creditor need not describe each credit by type (returned merchandise, rebate of finance charge, etc.)—“credit” would suffice—except if the creditor is using the periodic statement to satisfy the billing-error correction notice requirement. (See the commentary to §226.13(e) and (f).)
2. Format. A creditor may list credits relating to credit extensions (payments,
rebates, etc.) together with other types of credits (such as deposits to a checking account),
as long as the entries are identified so as to inform the consumer which type of credit
each entry represents.
3. Date. If only one date is disclosed (that is, the crediting date as required by the regulation), no further identification of that date is necessary. More than one date may be disclosed for a single entry, as long as it is clear which date represents the date on which credit was given.
4. Totals. A total of amounts credited during the billing cycle is not required.
7(a)(4) Periodic rates.
1. Disclosure of periodic rates—whether or not actually applied. Except as provided in §226.7(a)(4)(ii), any periodic rate that may be used to compute finance charges (and its corresponding annual percentage rate) must be disclosed whether or not it is applied during the billing cycle. For example:
i. If the consumer's account has both a purchase feature and a cash advance feature, the creditor must disclose the rate for each, even if the consumer only makes purchases on the account during the billing cycle.
ii. If the rate varies (such as when it is tied to a particular index), the creditor must disclose each rate in effect during the cycle for which the statement was issued.
2. Disclosure of periodic rates required only if imposition possible. With regard to the periodic rate disclosure (and its corresponding annual percentage rate), only rates that could have been imposed during the billing cycle reflected on the periodic statement need to be disclosed. For example:
i. If the creditor is changing rates effective during the next billing cycle (because of a variable-rate plan), the rates required to be disclosed under §226.7(a)(4) are only those in effect during the billing cycle reflected on the periodic statement. For example, if the monthly rate applied during May was 1.5%, but the creditor will increase the rate to 1.8% effective June 1, 1.5% (and its corresponding annual percentage rate) is the only required disclosure under §226.7(a)(4) for the periodic statement reflecting the May account activity.
ii. If rates applicable to a particular type of transaction changed after a certain date and the old rate is only being applied to transactions that took place prior to that date, the creditor need not continue to disclose the old rate for those consumers that have no outstanding balances to which that rate could be applied.
3. Multiple rates—same transaction. If two or more periodic rates are applied to the same balance for the same type of transaction (for example, if the finance charge consists of a monthly periodic rate of 1.5% applied to the outstanding balance and a required credit life insurance component calculated at 0.1% per month on the same outstanding balance), the creditor may do either of the following:
i. Disclose each periodic rate, the range of balances to which it is applicable, and the corresponding annual percentage rate for each. (For example, 1.5% monthly, 18% annual percentage rate; 0.1% monthly, 1.2% annual percentage rate.)
ii. Disclose one composite periodic rate (that is, 1.6% per month) along with the applicable range of balances and the corresponding annual percentage rate.
4. Corresponding annual percentage rate. In disclosing the annual percentage rate that corresponds to each periodic rate, the creditor may use “corresponding annual percentage rate,” “nominal annual percentage rate,” “corresponding nominal annual percentage rate,” or similar phrases.
5. Rate same as actual annual percentage rate. When the corresponding rate is the same as the annual percentage rate disclosed under §226.7(a)(7), the creditor need disclose only one annual percentage rate, but must use the phrase “annual percentage rate.”
6. Range of balances. See comment 6(a)(1)(ii)–1. A creditor is not required to adjust the range of balances disclosure to reflect the balance below which only a minimum charge applies.
7(a)(5) Balance on which finance charge computed.
1. Limitation to periodic rates. Section 226.7(a)(5) only requires disclosure of the balance(s) to which a periodic rate was applied and does not apply to balances on which other kinds of finance charges (such as transaction charges) were imposed. For example, if a consumer obtains a $1,500 cash advance subject to both a 1% transaction fee and a 1% monthly periodic rate, the creditor need only disclose the balance subject to the monthly rate (which might include portions of earlier cash advances not paid off in previous cycles).
2. Split rates applied to balance ranges. If split rates were applied to a balance because different portions of the balance fall within two or more balance ranges, the creditor need not separately disclose the portions of the balance subject to such different rates since the range of balances to which the rates apply has been separately disclosed. For example, a creditor could disclose a balance of $700 for purchases even though a monthly periodic rate of 1.5% applied to the first $500, and a monthly periodic rate of 1% to the remainder. This option to disclose a combined balance does not apply when the finance charge is computed by applying the split rates to each day's balance (in contrast, for example, to applying the rates to the average daily balance). In that case, the balances must be disclosed using any of the options that are available if two or more daily rates are imposed. (See comment 7(a)(5)–5.)
3. Monthly rate on average daily balance. Creditors may apply a monthly periodic rate to an average daily balance.
4. Multifeatured plans. In a multifeatured plan, the creditor must disclose a separate balance (or balances, as applicable) to which a periodic rate was applied for each feature or group of features subject to different periodic rates or different balance computation methods. Separate balances are not required, however, merely because a grace period is available for some features but not others. A total balance for the entire plan is optional. This does not affect how many balances the creditor must disclose—or may disclose—within each feature. (See, for example, comment 7(a)(5)–5.)
5. Daily rate on daily balances. i. If the finance charge is computed on the balance each day by application of one or more daily periodic rates, the balance on which the finance charge was computed may be disclosed in any of the following ways for each feature:
ii. If a single daily periodic rate is imposed, the balance to which it is applicable may be stated as:
A. A balance for each day in the billing cycle.
B. A balance for each day in the billing cycle on which the balance in the account changes.
C. The sum of the daily balances during the billing cycle.
D. The average daily balance during the billing cycle, in which case the creditor shall explain that the average daily balance is or can be multiplied by the number of days in the billing cycle and the periodic rate applied to the product to determine the amount of the finance charge.
iii. If two or more daily periodic rates may be imposed, the balances to which the rates are applicable may be stated as:
A. A balance for each day in the billing cycle.
B. A balance for each day in the billing cycle on which the balance in the account changes.
C. Two or more average daily balances, each applicable to the daily periodic rates imposed for the time that those rates were in effect, as long as the creditor explains that the finance charge is or may be determined by ( 1 ) multiplying each of the average balances by the number of days in the billing cycle (or if the daily rate varied during the cycle, by multiplying by the number of days the applicable rate was in effect), ( 2 ) multiplying each of the results by the applicable daily periodic rate, and ( 3 ) adding these products together.
6. Explanation of balance computation method. See the commentary to 6(a)(1)(iii).
7. Information to compute balance. In connection with disclosing the finance charge balance, the creditor need not give the consumer all of the information necessary to compute the balance if that information is not otherwise required to be disclosed. For example, if current purchases are included from the date they are posted to the account, the posting date need not be disclosed.
8. Non-deduction of credits. The creditor need not specifically identify the total dollar amount of credits not deducted in computing the finance charge balance. Disclosure of the amount of credits not deducted is accomplished by listing the credits (§226.7(a)(3)) and indicating which credits will not be deducted in determining the balance (for example, “credits after the 15th of the month are not deducted in computing the finance charge.”).
9. Use of one balance computation method explanation when multiple balances disclosed. Sometimes the creditor will disclose more than one balance to which a periodic rate was applied, even though each balance was computed using the same balance computation method. For example, if a plan involves purchases and cash advances that are subject to different rates, more than one balance must be disclosed, even though the same computation method is used for determining the balance for each feature. In these cases, one explanation of the balance computation method is sufficient. Sometimes the creditor separately discloses the portions of the balance that are subject to different rates because different portions of the balance fall within two or more balance ranges, even when a combined balance disclosure would be permitted under comment 7(a)(5)–2. In these cases, one explanation of the balance computation method is also sufficient (assuming, of course, that all portions of the balance were computed using the same method).
7(a)(6) Amount of finance charge and other charges.
Paragraph 7(a)(6)(i).
1. Total. A total finance charge amount for the plan is not required.
2. Itemization—types of finance charges. Each type of finance charge (such as
periodic rates, transaction charges, and minimum charges) imposed during the cycle must
be separately itemized; for example, disclosure of only a combined finance charge
attributable to both a minimum charge and transaction charges would not be permissible.
Finance charges of the same type may be disclosed, however, individually or as a total.
For example, five transaction charges of $1 may be listed separately or as $5.
3. Itemization—different periodic rates. Whether different periodic rates are
applicable to different types of transactions or to different balance ranges, the creditor
may give the finance charge attributable to each rate or may give a total finance charge
amount. For example, if a creditor charges 1.5% per month on the first $500 of a balance
and 1% per month on amounts over $500, the creditor may itemize the two components
($7.50 and $1.00) of the $8.50 charge, or may disclose $8.50.
4. Multifeatured plans. In a multifeatured plan, in disclosing the amount of the
finance charge attributable to the application of periodic rates no total periodic rate
disclosure for the entire plan need be given.
5. Finance charges not added to account. A finance charge that is not included in
the new balance because it is payable to a third party (such as required life insurance)
must still be shown on the periodic statement as a finance charge.
6. Finance charges other than periodic rates. See comment 6(a)(1)(iv)-1 for
examples.
7. Accrued finance charges allocated from payments. Some plans provide that
the amount of the finance charge that has accrued since the consumer’s last payment is
directly deducted from each new payment, rather than being separately added to each
statement and therefore reflected as an increase in the obligation. In such a plan, no
disclosure is required of finance charges that have accrued since the last payment.
8. Start-up fees. Points, loan fees, and similar finance charges relating to the
opening of the account that are paid prior to the issuance of the first periodic statement
need not be disclosed on the periodic statement. If, however, these charges are financed
as part of the plan, including charges that are paid out of the first advance, the charges
must be disclosed as part of the finance charge on the first periodic statement. However,
they need not be factored into the annual percentage rate. (See § 226.14(c)(3).)
Paragraph 7(a)(6)(ii).
1. Identification. In identifying any other charges actually imposed during the
billing cycle, the type is adequately described as late charge or membership fee, for
example. Similarly, closing costs or settlement costs, for example, may be used to
describe charges imposed in connection with real estate transactions that are excluded
from the finance charge under § 226.4(c)(7), if the same term (such as closing costs) was
used in the initial disclosures and if the creditor chose to itemize and individually disclose
the costs included in that term. Even though the taxes and filing or notary fees excluded
from the finance charge under § 226.4(e) are not required to be disclosed as other charges
under § 226.6(a)(2), these charges may be included in the amount shown as closing costs
or settlement costs on the periodic statement, if the charges were itemized and disclosed
as part of the closing costs or settlement costs on the initial disclosure statement. (See
comment 6(a)(2)-1 for examples of other charges.)
2. Date. The date of imposing or debiting other charges need not be disclosed.
3. Total. Disclosure of the total amount of other charges is optional.
4. Itemization—types of other charges. Each type of other charge (such as late-
payment charges, over-the-credit-limit charges, and membership fees) imposed during
the cycle must be separately itemized; for example, disclosure of only a total of other
charges attributable to both an over-the-credit-limit charge and a late-payment charge
would not be permissible. Other charges of the same type may be disclosed, however,
individually or as a total. For example, three fees of $3 for providing copies related to
the resolution of a billing error could be listed separately or as $9.
7(a)(7) Annual percentage rate.
1. Plans subject to the requirements of § 226.5b. For home-equity plans subject
to the requirements of § 226.5b, creditors are not required to disclose an effective annual
percentage rate. Creditors that state an annualized rate in addition to the corresponding
annual percentage rate required by § 226.7(a)(4) must calculate that rate in accordance
with § 226.14(c).
2. Labels. Creditors that choose to disclose an annual percentage rate calculated
under § 226.14(c) and label the figure as “annual percentage rate” must label the periodic
rate expressed as an annualized rate as the “corresponding APR,” “nominal APR,” or a
similar phrase as provided in comment 7(a)(4)-4. Creditors also comply with the label
requirement if the rate calculated under § 226.14(c) is described as the “effective APR”
or something similar. For those creditors, the periodic rate expressed as an annualized
rate could be labeled “annual percentage rate,” consistent with the requirement under
§ 226.7(b)(4). If the two rates represent different values, creditors must label the rates
differently to meet the clear and conspicuous standard under § 226.5(a)(1).
7(a)(8) Grace period.
1. Terminology. Although the creditor is required to indicate any time period the
consumer may have to pay the balance outstanding without incurring additional finance
charges, no specific wording is required, so long as the language used is consistent with
that used on the account-opening disclosure statement. For example, “To avoid
additional finance charges, pay the new balance before _______” would suffice.
7(a)(9) Address for notice of billing errors.
1. Terminology. The periodic statement should indicate the general purpose for
the address for billing-error inquiries, although a detailed explanation or particular
wording is not required.
2. Telephone number. A telephone number, e-mail address, or Web site location
may be included, but the mailing address for billing-error inquiries, which is the required
disclosure, must be clear and conspicuous. The address is deemed to be clear and
conspicuous if a precautionary instruction is included that telephoning or notifying the
creditor by e-mail or Web site will not preserve the consumer’s billing rights, unless the
creditor has agreed to treat billing error notices provided by electronic means as written
notices, in which case the precautionary instruction is required only for telephoning.
7(a)(10) Closing date of billing cycle; new balance.
1. Credit balances. See comment 7(a)(1)-1.
2. Multifeatured plans. In a multifeatured plan, the new balance may be
disclosed for each feature or for the plan as a whole. If separate new balances are
disclosed, a total new balance is optional.
3. Accrued finance charges allocated from payments. Some plans provide that
the amount of the finance charge that has accrued since the consumer’s last payment is
directly deducted from each new payment, rather than being separately added to each
statement and therefore reflected as an increase in the obligation. In such a plan, the new
balance need not reflect finance charges accrued since the last payment.
7(b) Rules affecting open-end (not home-secured) plans.
1. Deferred interest or similar transactions. Creditors offer a variety of payment
plans for purchases that permit consumers to avoid interest charges if the purchase
balance is paid in full by a certain date. “Deferred interest” has the same meaning as in
§ 226.16(h)(2) and associated commentary. The following provides guidance for a
deferred interest or similar plan where, for example, no interest charge is imposed on a
$500 purchase made in January if the $500 balance is paid by July 31.
i. Annual percentage rates. Under § 226.7(b)(4), creditors must disclose each
annual percentage rate that may be used to compute the interest charge. Under some
plans with a deferred interest or similar feature, if the deferred interest balance is not paid
by a certain date, July 31 in this example, interest charges applicable to the billing cycles
between the date of purchase in January and July 31 may be imposed. Annual percentage
rates that may apply to the deferred interest balance ($500 in this example) if the balance
is not paid in full by July 31 must appear on periodic statements for the billing cycles
between the date of purchase and July 31. However, if the consumer does not pay the
deferred interest balance by July 31, the creditor is not required to identify, on the
periodic statement disclosing the interest charge for the deferred interest balance, annual
percentage rates that have been disclosed in previous billing cycles between the date of
purchase and July 31.
ii. Balances subject to periodic rates. Under § 226.7(b)(5), creditors must
disclose the balances subject to interest during a billing cycle. The deferred interest
balance ($500 in this example) is not subject to interest for billing cycles between the
date of purchase and July 31 in this example. Periodic statements sent for those billing
cycles should not include the deferred interest balance in the balance disclosed under
§ 226.7(b)(5). This amount must be separately disclosed on periodic statements and
identified by a term other than the term used to identify the balance disclosed under
§ 226.7(b)(5) (such as “deferred interest balance”). During any billing cycle in which an
interest charge on the deferred interest balance is debited to the account, the balance
disclosed under § 226.7(b)(5) should include the deferred interest balance for that billing
cycle.
iii. Amount of interest charge. Under § 226.7(b)(6)(ii), creditors must disclose
interest charges imposed during a billing cycle. For some deferred interest purchases, the
creditor may impose interest from the date of purchase if the deferred interest balance
($500 in this example) is not paid in full by July 31 in this example, but otherwise will
not impose interest for billing cycles between the date of purchase and July 31. Periodic
statements for billing cycles preceding July 31 in this example should not include in the
interest charge disclosed under § 226.7(b)(6)(ii) the amounts a consumer may owe if the
deferred interest balance is not paid in full by July 31. In this example, the February
periodic statement should not identify as interest charges interest attributable to the $500
January purchase. This amount must be separately disclosed on periodic statements and
identified by a term other than “interest charge” (such as “contingent interest charge” or
“deferred interest charge”). The interest charge on a deferred interest balance should be
reflected on the periodic statement under § 226.7(b)(6)(ii) for the billing cycle in which
the interest charge is debited to the account.
iv. Due date to avoid obligation for finance charges under a deferred interest or
similar program. Section 226.7(b)(14) requires disclosure on periodic statements of the
date by which any outstanding balance subject to a deferred interest or similar program
must be paid in full in order to avoid the obligation for finance charges on such balance.
This disclosure must appear on the front of any page of each periodic statement issued
during the deferred interest period beginning with the first periodic statement issued
during the deferred interest period that reflects the deferred interest or similar transaction.
7(b)(1) Previous balance.
1. Credit balances. If the previous balance is a credit balance, it must be
disclosed in such a way so as to inform the consumer that it is a credit balance, rather
than a debit balance.
2. Multifeatured plans. In a multifeatured plan, the previous balance may be
disclosed either as an aggregate balance for the account or as separate balances for each
feature (for example, a previous balance for purchases and a previous balance for cash
advances). If separate balances are disclosed, a total previous balance is optional.
3. Accrued finance charges allocated from payments. Some open-end credit
plans provide that the amount of the finance charge that has accrued since the consumer’s
last payment is directly deducted from each new payment, rather than being separately
added to each statement and reflected as an increase in the obligation. In such a plan, the
previous balance need not reflect finance charges accrued since the last payment.
7(b)(2) Identification of transactions.
1. Multifeatured plans. Creditors may, but are not required to, arrange
transactions by feature (such as disclosing purchase transactions separately from cash
advance transactions). Pursuant to § 226.7(b)(6), however, creditors must group all fees
and all interest separately from transactions and may not disclose any fees or interest
charges with transactions.
2. Automated teller machine (ATM) charges imposed by other institutions in
shared or interchange systems. A charge imposed on the cardholder by an institution
other than the card issuer for the use of the other institution’s ATM in a shared or
interchange system and included by the terminal-operating institution in the amount of
the transaction need not be separately disclosed on the periodic statement.
7(b)(3) Credits.
1. Identification—sufficiency. The creditor need not describe each credit by type
(returned merchandise, rebate of finance charge, etc.)—“credit” would suffice—except if
the creditor is using the periodic statement to satisfy the billing-error correction notice
requirement. (See the commentary to § 226.13(e) and (f).) Credits may be distinguished
from transactions in any way that is clear and conspicuous, for example, by use of debit
and credit columns or by use of plus signs and/or minus signs.
2. Date. If only one date is disclosed (that is, the crediting date as required by the
regulation), no further identification of that date is necessary. More than one date may be
disclosed for a single entry, as long as it is clear which date represents the date on which
credit was given.
3. Totals. A total of amounts credited during the billing cycle is not required.
7(b)(4) Periodic rates.
1. Disclosure of periodic interest rates—whether or not actually applied. Except
as provided in § 226.7(b)(4)(ii), any periodic interest rate that may be used to compute
finance charges, expressed as and labeled “Annual Percentage Rate,” must be disclosed
whether or not it is applied during the billing cycle. For example:
i. If the consumer’s account has both a purchase feature and a cash advance
feature, the creditor must disclose the annual percentage rate for each, even if the
consumer only makes purchases on the account during the billing cycle.
ii. If the annual percentage rate varies (such as when it is tied to a particular
index), the creditor must disclose each annual percentage rate in effect during the cycle
for which the statement was issued.
2. Disclosure of periodic interest rates required only if imposition possible. With
regard to the periodic interest rate disclosure (and its corresponding annual percentage
rate), only rates that could have been imposed during the billing cycle reflected on the
periodic statement need to be disclosed. For example:
i. If the creditor is changing annual percentage rates effective during the next
billing cycle (either because it is changing terms or because of a variable-rate plan), the
annual percentage rates required to be disclosed under § 226.7(b)(4) are only those in
effect during the billing cycle reflected on the periodic statement. For example, if the
annual percentage rate applied during May was 18%, but the creditor will increase the
rate to 21% effective June 1, 18% is the only required disclosure under § 226.7(b)(4) for
the periodic statement reflecting the May account activity.
ii. If the consumer has an overdraft line that might later be expanded upon the
consumer’s request to include secured advances, the rates for the secured advance feature
need not be given until such time as the consumer has requested and received access to
the additional feature.
iii. If annual percentage rates applicable to a particular type of transaction
changed after a certain date and the old rate is only being applied to transactions that took
place prior to that date, the creditor need not continue to disclose the old rate for those
consumers that have no outstanding balances to which that rate could be applied.
3. Multiple rates—same transaction. If two or more periodic rates are applied to
the same balance for the same type of transaction (for example, if the interest charge
consists of a monthly periodic interest rate of 1.5% applied to the outstanding balance
and a required credit life insurance component calculated at 0.1% per month on the same
outstanding balance), creditors must disclose the periodic interest rate, expressed as an
18% annual percentage rate and the range of balances to which it is applicable. Costs
attributable to the credit life insurance component must be disclosed as a fee under
§ 226.7(b)(6)(iii).
4. Fees. Creditors that identify fees in accordance with § 226.7(b)(6)(iii) need
not identify the periodic rate at which a fee would accrue if the fee remains unpaid. For
example, assume a fee is imposed for a late payment in the previous cycle and that the
fee, unpaid, would be included in the purchases balance and accrue interest at the rate for
purchases. The creditor need not separately disclose that the purchase rate applies to the
portion of the purchases balance attributable to the unpaid fee.
5. Ranges of balances. See comment 6(b)(4)(i)(B)-1. A creditor is not required
to adjust the range of balances disclosure to reflect the balance below which only a
minimum charge applies.
6. Deferred interest transactions. See comment 7(b)-1.i.
7(b)(5) Balance on which finance charge computed.
1. Split rates applied to balance ranges. If split rates were applied to a balance
because different portions of the balance fall within two or more balance ranges, the
creditor need not separately disclose the portions of the balance subject to such different
rates since the range of balances to which the rates apply has been separately disclosed.
For example, a creditor could disclose a balance of $700 for purchases even though a
monthly periodic rate of 1.5% applied to the first $500, and a monthly periodic rate of 1%
to the remainder. This option to disclose a combined balance does not apply when the
interest charge is computed by applying the split rates to each day’s balance (in contrast,
for example, to applying the rates to the average daily balance). In that case, the balances
must be disclosed using any of the options that are available if two or more daily rates are
imposed. (See comment 7(b)(5)-4.)
2. Monthly rate on average daily balance. Creditors may apply a monthly
periodic rate to an average daily balance.
3. Multifeatured plans. In a multifeatured plan, the creditor must disclose a
separate balance (or balances, as applicable) to which a periodic rate was applied for each
feature. Separate balances are not required, however, merely because a grace period is
available for some features but not others. A total balance for the entire plan is optional.
This does not affect how many balances the creditor must disclose—or may disclose—
within each feature. (See, for example, comments 7(b)(5)-4 and 7(b)(4)-5.)
4. Daily rate on daily balance. i. If a finance charge is computed on the balance
each day by application of one or more daily periodic interest rates, the balance on which
the interest charge was computed may be disclosed in any of the following ways for each
feature:
ii. If a single daily periodic interest rate is imposed, the balance to which it is
applicable may be stated as:
A. A balance for each day in the billing cycle.
B. A balance for each day in the billing cycle on which the balance in the account
changes.
C. The sum of the daily balances during the billing cycle.
D. The average daily balance during the billing cycle, in which case the creditor
may, at its option, explain that the average daily balance is or can be multiplied by the
number of days in the billing cycle and the periodic rate applied to the product to
determine the amount of interest.
iii. If two or more daily periodic interest rates may be imposed, the balances to
which the rates are applicable may be stated as:
A. A balance for each day in the billing cycle.
B. A balance for each day in the billing cycle on which the balance in the account
changes.
C. Two or more average daily balances, each applicable to the daily periodic
interest rates imposed for the time that those rates were in effect. The creditor may, at its
option, explain that interest is or may be determined by (1) multiplying each of the
average balances by the number of days in the billing cycle (or if the daily rate varied
during the cycle, by multiplying by the number of days the applicable rate was in effect),
(2) multiplying each of the results by the applicable daily periodic rate, and (3) adding
these products together.
5. Information to compute balance. In connection with disclosing the interest
charge balance, the creditor need not give the consumer all of the information necessary
to compute the balance if that information is not otherwise required to be disclosed. For
example, if current purchases are included from the date they are posted to the account,
the posting date need not be disclosed.
6. Non-deduction of credits. The creditor need not specifically identify the total
dollar amount of credits not deducted in computing the finance charge balance.
Disclosure of the amount of credits not deducted is accomplished by listing the
credits (§ 226.7(b)(3)) and indicating which credits will not be deducted in determining
the balance (for example, “credits after the 15th of the month are not deducted in
computing the interest charge.”).
7. Use of one balance computation method explanation when multiple balances
disclosed. Sometimes the creditor will disclose more than one balance to which a
periodic rate was applied, even though each balance was computed using the same
balance computation method. For example, if a plan involves purchases and cash
advances that are subject to different rates, more than one balance must be disclosed,
even though the same computation method is used for determining the balance for each
feature. In these cases, one explanation or a single identification of the name of the
balance computation method is sufficient. Sometimes the creditor separately discloses
the portions of the balance that are subject to different rates because different portions of
the balance fall within two or more balance ranges, even when a combined balance
disclosure would be permitted under comment 7(b)(5)–1. In these cases, one explanation
or a single identification of the name of the balance computation method is also sufficient
(assuming, of course, that all portions of the balance were computed using the same
method). In these cases, a creditor may use an appropriate name listed in § 226.5a(g)
(e.g., “average daily balance (including new purchases)”) as the single identification of
the name of the balance computation method applicable to all features, even though the
name only refers to purchases. For example, if a creditor uses the average daily balance
method including new transactions for all features, a creditor may use the name “average
daily balance (including new purchases)” listed in § 226.5a(g)(i) to satisfy the
requirement to disclose the name of the balance computation method for all features. As
an alternative, in this situation, a creditor may revise the balance computation names
listed in § 226.5a(g) to refer more broadly to all new credit transactions, such as using the
language “new transactions” or “current transactions” (e.g., “average daily balance
(including new transactions)”), rather than simply referring to new purchases, when the
same method is used to calculate the balances for all features of the account.
8. Use of balance computation names in § 226.5a(g) for balances other than
purchases. The names of the balance computation methods listed in § 226.5a(g) describe
balance computation methods for purchases. When a creditor is disclosing the name of
the balance computation methods separately for each feature, in using the names listed in
§ 226.5a(g) to satisfy the requirements of § 226.7(b)(5) for features other than purchases,
a creditor must revise the names listed in § 226.5a(g) to refer to the other features. For
example, when disclosing the name of the balance computation method applicable to
cash advances, a creditor must revise the name listed in § 226.5a(g)(i) to disclose it as
“average daily balance (including new cash advances)” when the balance for cash
advances is figured by adding the outstanding balance (including new cash advances and
deducting payments and credits) for each day in the billing cycle, and then dividing by
the number of days in the billing cycle. Similarly, a creditor must revise the name listed
in § 226.5a(g)(ii) to disclose it as “average daily balance (excluding new cash advances)”
when the balance for cash advances is figured by adding the outstanding balance
(excluding new cash advances and deducting payments and credits) for each day in the
billing cycle, and then dividing by the number of days in the billing cycle. See comment
7(b)(5)-7 for guidance on the use of one balance computation method explanation or
name when multiple balances are disclosed.
7(b)(6) Charges imposed.
1. Examples of charges. See commentary to § 226.6(b)(3).
2. Fees. Costs attributable to periodic rates other than interest charges shall be
disclosed as a fee. For example, if a consumer obtains credit life insurance that is
calculated at 0.1% per month on an outstanding balance and a monthly interest rate of
1.5% applies to the same balance, the creditor must disclose the dollar cost attributable to
interest as an “interest charge” and the credit insurance cost as a “fee.”
3. Total fees for calendar year to date.
i. Monthly statements. Some creditors send monthly statements but the statement
periods do not coincide with the calendar month. For creditors sending monthly
statements, the following comply with the requirement to provide calendar year-to-date
totals.
A. A creditor may disclose calendar-year-to-date totals at the end of the calendar
year by separately aggregating finance charges attributable to periodic interest rates and
fees for 12 monthly cycles, starting with the period that begins during January and
finishing with the period that begins during December. For example, if statement periods
begin on the 10th day of each month, the statement covering December 10, 2011 through
January 9, 2012, may disclose the separate year-to-date totals for interest charged and
fees imposed from January 10, 2011, through January 9, 2012. Alternatively, the creditor
could provide a statement for the cycle ending January 9, 2012, showing the separate
year-to-date totals for interest charged and fees imposed January 1, 2011, through
December 31, 2011.
B. A creditor may disclose calendar-year-to-date totals at the end of the calendar
year by separately aggregating finance charges attributable to periodic interest rates and
fees for 12 monthly cycles, starting with the period that begins during December and
finishing with the period that begins during November. For example, if statement periods
begin on the 10th day of each month, the statement covering November 10, 2011 through
December 9, 2011, may disclose the separate year-to-date totals for interest charged and
fees imposed from December 10, 2010, through December 9, 2011.
ii. Quarterly statements. Creditors issuing quarterly statements may apply the
guidance set forth for monthly statements to comply with the requirement to provide
calendar year-to-date totals on quarterly statements.
4. Minimum charge in lieu of interest. A minimum charge imposed if a charge
would otherwise have been determined by applying a periodic rate to a balance except for
the fact that such charge is smaller than the minimum must be disclosed as a fee. For
example, assume a creditor imposes a minimum charge of $1.50 in lieu of interest if the
calculated interest for a billing period is less than that minimum charge. If the interest
calculated on a consumer’s account for a particular billing period is 50 cents, the
minimum charge of $1.50 would apply. In this case, the entire $1.50 would be disclosed
as a fee; the periodic statement would reflect the $1.50 as a fee, and $0 in interest.
5. Adjustments to year-to-date totals. In some cases, a creditor may provide a
statement for the current period reflecting that fees or interest charges imposed during a
previous period were waived or reversed and credited to the account. Creditors may, but
are not required to, reflect the adjustment in the year-to-date totals, nor, if an adjustment
is made, to provide an explanation about the reason for the adjustment. Such adjustments
should not affect the total fees or interest charges imposed for the current statement
period.
6. Acquired accounts. An institution that acquires an account or plan must
include, as applicable, fees and charges imposed on the account or plan prior to the
acquisition in the aggregate disclosures provided under § 226.7(b)(6) for the acquired
account or plan. Alternatively, the institution may provide separate totals reflecting
activity prior and subsequent to the account or plan acquisition. For example, a creditor
that acquires an account or plan on August 12 of a given calendar year may provide one
total for the period from January 1 to August 11 and a separate total for the period
beginning on August 12 .
7. Account upgrades. A creditor that upgrades, or otherwise changes, a
consumer’s plan to a different open-end credit plan must include, as applicable, fees and
charges imposed for that portion of the calendar year prior to the upgrade or change in the
consumer’s plan in the aggregate disclosures provided pursuant to § 226.7(b)(6) for the
new plan. For example, assume a consumer has incurred $125 in fees for the calendar
year to date for a retail credit card account, which is then replaced by a cobranded credit
card account also issued by the creditor. In this case, the creditor must reflect the $125 in
fees incurred prior to the replacement of the retail credit card account in the calendar
year-to-date totals provided for the cobranded credit card account. Alternatively, the
institution may provide two separate totals reflecting activity prior and subsequent to the
plan upgrade or change.
7(b)(7) Change-in-terms and increased penalty rate summary for open-end (not
home-secured) plans.
1. Location of summary tables. If a change-in-terms notice required by
§ 226.9(c)(2) is provided on or with a periodic statement, a tabular summary of key
changes must appear on the front of the statement. Similarly, if a notice of a rate increase
due to delinquency or default or as a penalty required by § 226.9(g)(1) is provided on or
with a periodic statement, information required to be provided about the increase,
presented in a table, must appear on the front of the statement.
7(b)(8) Grace period.
1. Terminology. In describing the grace period, the language used must be
consistent with that used on the account-opening disclosure statement. (See
§ 226.5(a)(2)(i).)
2. Deferred interest transactions. See comment 7(b)-1.iv.
3. Limitations on the imposition of finance charges in § 226.54. Section
226.7(b)(8) does not require a card issuer to disclose the limitations on the imposition of
finance charges as a result of a loss of a grace period in § 226.54, or the impact of
payment allocation on whether interest is charged on transactions as a result of a loss of a
grace period.
7(b)(9) Address for notice of billing errors.
1. Terminology. The periodic statement should indicate the general purpose for
the address for billing-error inquiries, although a detailed explanation or particular
wording is not required.
2. Telephone number. A telephone number, e-mail address, or Web site location
may be included, but the mailing address for billing-error inquiries, which is the required
disclosure, must be clear and conspicuous. The address is deemed to be clear and
conspicuous if a precautionary instruction is included that telephoning or notifying the
creditor by e-mail or Web site will not preserve the consumer’s billing rights, unless the
creditor has agreed to treat billing error notices provided by electronic means as written
notices, in which case the precautionary instruction is required only for telephoning.
7(b)(10) Closing date of billing cycle; new balance.
1. Credit balances. See comment 7(b)(1)-1.
2. Multifeatured plans. In a multifeatured plan, the new balance may be
disclosed for each feature or for the plan as a whole. If separate new balances are
disclosed, a total new balance is optional.
3. Accrued finance charges allocated from payments. Some plans provide that
the amount of the finance charge that has accrued since the consumer’s last payment is
directly deducted from each new payment, rather than being separately added to each
statement and therefore reflected as an increase in the obligation. In such a plan, the new
balance need not reflect finance charges accrued since the last payment.
7(b)(11) Due date; late payment costs.
1. Informal periods affecting late payments. Although the terms of the account
agreement may provide that a card issuer may assess a late payment fee if a payment is
not received by a certain date, the card issuer may have an informal policy or practice
that delays the assessment of the late payment fee for payments received a brief period of
time after the date upon which a card issuer has the contractual right to impose the fee. A
card issuer must disclose the due date according to the legal obligation between the
parties, and need not consider the end of an informal “courtesy period” as the due date
under § 226.7(b)(11).
2. Assessment of late payment fees. Some state or other laws require that a
certain number of days must elapse following a due date before a late payment fee may
be imposed. In addition, a card issuer may be restricted by the terms of the account
agreement from imposing a late payment fee until a payment is late for a certain number
of days following a due date. For example, assume a payment is due on March 10 and
the account agreement or state law provides that a late payment fee cannot be assessed
before March 21. A card issuer must disclose the due date under the terms of the legal
obligation (March 10 in this example), and not a date different than the due date, such as
when the card issuer is restricted by the account agreement or state or other law from
imposing a late payment fee unless a payment is late for a certain number of days
following the due date (March 21 in this example). Consumers’ rights under state law to
avoid the imposition of late payment fees during a specified period following a due date
are unaffected by the disclosure requirement. In this example, the card issuer would
disclose March 10 as the due date for purposes of § 226.7(b)(11), but could not, under
state law, assess a late payment fee before March 21.
3. Fee or rate triggered by multiple events. If a late payment fee or penalty rate is
triggered after multiple events, such as two late payments in six months, the card issuer
may, but is not required to, disclose the late payment and penalty rate disclosure each
month. The disclosures must be included on any periodic statement for which a late
payment could trigger the late payment fee or penalty rate, such as after the consumer
made one late payment in this example. For example, if a cardholder has already made
one late payment, the disclosure must be on each statement for the following five billing
cycles.
4. Range of late fees or penalty rates. A card issuer that imposes a range of late
payment fees or rates on a credit card account under an open-end (not home-secured)
consumer credit plan may state the highest fee or rate along with an indication lower fees
or rates could be imposed. For example, a phrase indicating the late payment fee could
be “up to $29” complies with this requirement.
5. Penalty rate in effect. If the highest penalty rate has previously been triggered
on an account, the card issuer may, but is not required to, delete the amount of the penalty
rate and the warning that the rate may be imposed for an untimely payment, as not
applicable. Alternatively, the card issuer may, but is not required to, modify the language
to indicate that the penalty rate has been increased due to previous late payments (if
applicable).
6. Same day each month. The requirement that the due date be the same day
each month means that the due date must generally be the same numerical date. For
example, a consumer’s due date could be the 25th of every month. In contrast, a due date
that is the same relative date but not numerical date each month, such as the third
Tuesday of the month, generally would not comply with this requirement. However, a
consumer’s due date may be the last day of each month, even though that date will not be
the same numerical date. For example, if a consumer’s due date is the last day of each
month, it will fall on February 28th (or February 29th in a leap year) and on August 31st.
7. Change in due date. A creditor may adjust a consumer’s due date from time to
time provided that the new due date will be the same numerical date each month on an
ongoing basis. For example, a creditor may choose to honor a consumer’s request to
change from a due date that is the 20th of each month to the 5th of each month, or may
choose to change a consumer’s due date from time to time for operational reasons. See
comment 2(a)(4)-3 for guidance on transitional billing cycles.
8. Billing cycles longer than one month. The requirement that the due date be the same day each month does not prohibit billing cycles that are two or three months, provided that the due date for each billing cycle is on the same numerical date of the
month. For example, a creditor that establishes two-month billing cycles could send a
consumer periodic statements disclosing due dates of January 25, March 25, and May 25.
9. Payment due date when the creditor does not accept or receive payments by
mail. If the due date in a given month falls on a day on which the creditor does not
receive or accept payments by mail and the creditor is required to treat a payment
received the next business day as timely pursuant to § 226.10(d), the creditor must
disclose the due date according to the legal obligation between the parties, not the date as
of which the creditor is permitted to treat the payment as late. For example, assume that
the consumer’s due date is the 4th of every month and the creditor does not accept or receive payments by mail on Thursday, July 4. Pursuant to § 226.10(d), the creditor may not treat a mailed payment received on the following business day, Friday, July 5, as late
for any purpose. The creditor must nonetheless disclose July 4 as the due date on the
periodic statement and may not disclose a July 5 due date.
7(b)(12) Repayment disclosures.
1. Rounding. In disclosing on the periodic statement the minimum payment total
cost estimate, the estimated monthly payment for repayment in 36 months, the total cost
estimate for repayment in 36 months, and the savings estimate for repayment in 36
months under § 226.7(b)(12)(i) or (b)(12)(ii) as applicable, a card issuer, at its option,
must either round these disclosures to the nearest whole dollar or to the nearest cent.
Nonetheless, an issuer’s rounding for all of these disclosures must be consistent. An
issuer may round all of these disclosures to the nearest whole dollar when disclosing
them on the periodic statement, or may round all of these disclosures to the nearest cent.
An issuer may not, however, round some of the disclosures to the nearest whole dollar,
while rounding other disclosures to the nearest cent.
Paragraph 7(b)(12)(i)(F)
1. Minimum payment repayment estimate disclosed on the periodic statement is
three years or less. Section 226.7(b)(12)(i)(F)(2)(i) provides that a credit card issuer is not required to provide the disclosures related to repayment in 36 months if the minimum
payment repayment estimate disclosed under § 226.7(b)(12)(i)(B) after rounding is 3
years or less. For example, if the minimum payment repayment estimate is 2 years 6
months to 3 years 5 months, issuers would be required under § 226.7(b)(12)(i)(B) to
disclose that it would take 3 years to pay off the balance in full if making only the
minimum payment. In these cases, an issuer would not be required to disclose the 36-
month disclosures on the periodic statement because the minimum payment repayment
estimate disclosed to the consumer on the periodic statement (after rounding) is 3 years or
less.
7(b)(12)(iv) Provision of information about credit counseling services.
1. Approved organizations. Section 226.7(b)(12)(iv)(A) requires card issuers to
provide information regarding at least three organizations that have been approved by the
United States Trustee or a bankruptcy administrator pursuant to 11 U.S.C. 111(a)(1) to
provide credit counseling services in, at the card issuer’s option, either the state in which
the billing address for the account is located or the state specified by the consumer.
A card issuer does not satisfy the requirements in § 226.7(b)(12)(iv)(A) by providing
information regarding providers that have been approved pursuant to 11 U.S.C. 111(a)(2)
to offer personal financial management courses.
2. Information regarding approved organizations.
i. Provision of information obtained from United States Trustee or bankruptcy
administrator. A card issuer complies with the requirements of § 226.7(b)(12)(iv)(A) if,
through the toll-free number disclosed pursuant to § 226.7(b)(12)(i) or (b)(12)(ii), it
provides the consumer with information obtained from the United States Trustee or a
bankruptcy administrator, such as information obtained from the Web site operated by
the United States Trustee. Section 226.7(b)(12)(iv)(A) does not require a card issuer to
provide information that is not available from the United States Trustee or a bankruptcy
administrator. If, for example, the Web site address for an organization approved by the
United States Trustee is not available from the Web site operated by the United States
Trustee, a card issuer is not required to provide a Web site address for that organization.
However, § 226.7(b)(12)(iv)(B) requires the card issuer to, at least annually, update the
information it provides for consistency with the information provided by the United
States Trustee or a bankruptcy administrator.
ii. Provision of information consistent with request of approved organization. If
requested by an approved organization, a card issuer may at its option provide, in
addition to the name of the organization obtained from the United States Trustee or a
bankruptcy administrator, another name used by that organization through the toll-free
number disclosed pursuant to § 226.7(b)(12)(i) or (b)(12)(ii). In addition, if requested by
an approved organization, a card issuer may at its option provide through the toll-free
number disclosed pursuant to § 226.7(b)(12)(i) or (b)(12)(ii) a street address, telephone
number, or Web site address for the organization that is different than the street address,
telephone number, or Web site address obtained from the United States Trustee or a
bankruptcy administrator. However, if requested by an approved organization, a card
issuer must not provide information regarding that organization through the toll-free
number disclosed pursuant to § 226.7(b)(12)(i) or (b)(12)(ii).
iii. Information regarding approved organizations that provide credit counseling
services in a language other than English. A card issuer may at its option provide
through the toll-free number disclosed pursuant to § 226.7(b)(12)(i) or (b)(12)(ii)
information regarding approved organizations that provide credit counseling services in
languages other than English. In the alternative, a card issuer may at its option state that
such information is available from the Web site operated by the United States Trustee.
Disclosing this Web site address does not by itself constitute a statement that
organizations have been approved by the United States Trustee for purposes of
comment 7(b)(12)(iv)-2.iv.
iv. Statements regarding approval by the United States Trustee or a bankruptcy
administrator. Section 226.7(b)(12)(iv) does not require a card issuer to disclose through
the toll-free number disclosed pursuant to § 226.7(b)(12)(i) or (b)(12)(ii) that
organizations have been approved by the United States Trustee or a bankruptcy
administrator. However, if a card issuer chooses to make such a disclosure,
§ 226.7(b)(12)(iv) requires that the card issuer also disclose that:
A. The United States Trustee or a bankruptcy administrator has determined that
the organizations meet the minimum requirements for nonprofit pre-bankruptcy budget
and credit counseling;
B. The organizations may provide other credit counseling services that have not
been reviewed by the United States Trustee or a bankruptcy administrator; and
C. The United States Trustee or the bankruptcy administrator does not endorse or
recommend any particular organization.
3. Automated response systems or devices. At their option, card issuers may use
toll-free telephone numbers that connect consumers to automated systems, such as an
interactive voice response system, through which consumers may obtain the information
required by § 226.7(b)(12)(iv) by inputting information using a touch-tone telephone or
similar device.
4. Toll-free telephone number. A card issuer may provide a toll-free telephone
number that is designed to handle customer service calls generally, so long as the option
to receive the information required by § 226.7(b)(12)(iv) is prominently disclosed to the
consumer. For automated systems, the option to receive the information required by
§ 226.7(b)(12)(iv) is prominently disclosed to the consumer if it is listed as one of the
options in the first menu of options given to the consumer, such as ‘‘Press or say ‘3’ if
you would like information about credit counseling services.’’ If the automated system
permits callers to select the language in which the call is conducted and in which
information is provided, the menu to select the language may precede the menu with the
option to receive information about accessing credit counseling services.
5. Third parties. At their option, card issuers may use a third party to establish
and maintain a toll-free telephone number for use by the issuer to provide the information
required by § 226.7(b)(12)(iv).
6. Web site address. When making the repayment disclosures on the periodic
statement pursuant to § 226.7(b)(12), a card issuer at its option may also include a
reference to a Web site address (in addition to the toll-free telephone number) where its
customers may obtain the information required by § 226.7(b)(12)(iv), so long as the
information provided on the Web site complies with § 226.7(b)(12)(iv). The Web site
address disclosed must take consumers directly to the Web page where information about
accessing credit counseling may be obtained. In the alternative, the card issuer may
disclose the Web site address for the Web page operated by the United States Trustee
where consumers may obtain information about approved credit counseling
organizations. Disclosing this Web site address does not by itself constitute a statement
that organizations have been approved by the United States Trustee for purposes of
comment 7(b)(12)(iv)-2.iv.
7. Advertising or marketing information. If a consumer requests information
about credit counseling services, the card issuer may not provide advertisements or
marketing materials to the consumer (except for providing the name of the issuer) prior to
providing the information required by § 226.7(b)(12)(iv). Educational materials that do
not solicit business are not considered advertisements or marketing materials for this
purpose. Examples:
i. Toll-free telephone number. As described in comment 7(b)(12)(iv)–4, an
issuer may provide a toll-free telephone number that is designed to handle customer
service calls generally, so long as the option to receive the information required by
§ 226.7(b)(12)(iv) through that toll-free telephone number is prominently disclosed to the
consumer. Once the consumer selects the option to receive the information required by
§ 226.7(b)(12)(iv), the issuer may not provide advertisements or marketing materials to
the consumer (except for providing the name of the issuer) prior to providing the required
information.
ii. Web page. If the issuer discloses a link to a Web site address as part of the
disclosures pursuant to comment 7(b)(12)(iv)–6, the issuer may not provide
advertisements or marketing materials (except for providing the name of the issuer) on
the Web page accessed by the address prior to providing the information required by
§ 226.7(b)(12)(iv).
7(b)(12)(v) Exemptions.
1. Billing cycle where paying the minimum payment due for that billing cycle
will pay the outstanding balance on the account for that billing cycle. Under
§ 226.7(b)(12)(v)(C), a card issuer is exempt from the repayment disclosure requirements
set forth in § 226.7(b)(12) for a particular billing cycle where paying the minimum
payment due for that billing cycle will pay the outstanding balance on the account for that
billing cycle. For example, if the entire outstanding balance on an account for a
particular billing cycle is $20 and the minimum payment is $20, an issuer would not need
to comply with the repayment disclosure requirements for that particular billing cycle. In
addition, this exemption would apply to a charged-off account where payment of the
entire account balance is due immediately.
7(b)(13) Format requirements.
1. Combined deposit account and credit account statements. Some financial
institutions provide information about deposit account and open-end credit account
activity on one periodic statement. For purposes of providing disclosures on the front of
the first page of the periodic statement pursuant to § 226.7(b)(13), the first page of such a
combined statement shall be the page on which credit transactions first appear.
Click here to return to Section 226.7 of the Regulation.
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