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#2219405 - 08/08/19 08:57 PM Reg Z_APR Tolerance
Daley Offline
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Joined: Aug 2018
Posts: 16
For the 1026.14(a), regarding the 1/8 of 1% tolerance, how does that apply to credit cards? Cards apply a periodic rate, therefore, is the tolerance calculated based on the periodic rate and interest billed for a billing period or is it based on the yearly rate and the total of all interest billed for the year?

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#2219407 - 08/08/19 10:35 PM Re: Reg Z_APR Tolerance Daley
rainman Offline
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Joined: Nov 2004
Posts: 3,019
Neither. Per Section 1026.14(b), you don't look at interest billed at all. The APR is determined by multiplying the periodic rate by the number of periods in a year. So the tolerance for this disclosure is really just whether you did your multiplication right. If the daily periodic rate is .027397%, the APR is 10.00% (or more accurately 9.9999%). The old "statement APR" that included non-interest finance charges and was calculated based on finance charges actually charged and account balances now only applies to HELOCs under 1026.7(a) and even then, it's optional.
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