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#1648801 - 01/10/12 07:51 PM Reg DD Interest
Anonymous
Unregistered

Bank wants to offer an interest bearing checking account but wants tto condition the payment of interest on the consumer signing up for direct deposit or online bill payments. Bank may make this a tiered rate account. Each tier will pay interest if the direct deposit or online bill payment requirement is met. Is this okay?

Section 627 of TISA addresses the payment of interest. It indicates interest is to be calculated on the full amount of principal in the account for each day of the stated calculation period. Would this section prohibit the bank from conditioning the payment of interest on satisfying the requirements stated above?

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#1648816 - 01/10/12 07:55 PM Re: Reg DD Interest Anonymous
BrendaC Offline
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BrendaC
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Sweet Home AL
You can require a direct deposit or online banking to qualify for the account, but I don't think you can deny interest payment based on whether the customer has these.
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#1648990 - 01/10/12 09:40 PM Re: Reg DD Interest Anonymous
Compli(cated) Offline
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Posts: 185
Wisconsin
You can have those as conditions, but you cannot take the interest down to 0% even if those are not met.

You can read more about this in the FDIC SCANS Bulletin number: Chiro-05-2007.
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#1649008 - 01/10/12 09:46 PM Re: Reg DD Interest Anonymous
Doug Hendrickson Offline
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I'm presuming that you can still base the payment of interest, including paying no interest, based on a minimum balance in the account, as long as that is part of the disclosure/agreement (i.e., if during any day in the cycle your balance drops below $100, no interest will be paid for that cycle)?
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#1649011 - 01/10/12 10:01 PM Re: Reg DD Interest Anonymous
BrendaC Offline
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BrendaC
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Sweet Home AL
No interest is paid for the days the balance was below the required minimum; interest is paid for the days the balance met the required minimum.

a)(2) Determination of minimum balance to earn interest

1. Daily balance accounts. Institutions that require a minimum balance may choose not to pay interest for days when the balance drops below the required minimum, if they use the daily balance method to calculate interest.

Last edited by BrendaC; 01/10/12 10:04 PM. Reason: add Reg info
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#1649016 - 01/10/12 09:53 PM Re: Reg DD Interest Anonymous
Compli(cated) Offline
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Joined: Mar 2011
Posts: 185
Wisconsin
Yes Doug, not meeting the minimum balance requirement is the only situation that allows to not pay interest, according to FDIC's view of Reg DD.
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#1649074 - 01/10/12 11:02 PM Re: Reg DD Interest Compli(cated)
Anonymous
Unregistered

Thanks doedoe. I found these BOL discussions when I did a search on google.com for the bulletin you referenced. BOL Discussion about Reward Checking Bulletin from FDIC

2007 BOL Discussion Rewards Checking

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#1649269 - 01/11/12 02:59 PM Re: Reg DD Interest Anonymous
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100 Club
Joined: Mar 2011
Posts: 185
Wisconsin
I saw this discussion too when trying to solve this puzzle.

The reduction of interest to just above 0 was our first solution too. Now we are looking into automatically converting the non-qualifying Rewards Checking accounts into a different type of an account that we offer, instead of changing the interest rates.
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