Our bank charges a non-refundable application fee that we do on occasion refund. Is it included in the finance charge? The Reg. Z finance charge chart says Yes but that an exception is if it is charged to all applicants. Then no. We do charge all applicants but occasionally refund. Should it be included in the finance charge?

Yes, because you do not charge all applicants the fee since it is occasionally refunded.

Thanks.

Apply the same strict standards as for pregnancy: yes or no - no gray area. The moment you refund the first "non-refundable" fee, you change all subsequent fees (and possibly the ones excluded in the past) into FCs.

Newbie question:
So if a fee is considered refundable, it is not included as a Finance Charge? How do we determine if a fee is refundable or not?

If it is refundable it IS included in the finance charge.

Thanks, Duchess Skittles. I'm assuming that the issue of "refundable or not" will be in our state urusy laws? Or is there someplace in Reg Z where it outlines what is or is not refundable?

Actually it's up to your institution. An application fee, as long as it is charged to ALL applicants, is not considered a prepaid finance charge. This is listed in Reg Z - 226.4, I believe.

Thank you!