Hi, we have a money market product in the a promo rate of 1.5% will apply for the first nine months and then the account will revert to the standard rate sheet rates. To add another layer of complexity in, there are four tiers each with a different interest rate.

Do I simply have to disclose a single "blended" APY for each tier following the guidance in Regulation DD, Appendix A, Section C. Variable Rate Accounts on the TISA?

Thank you.

1.5%? hmmm.

Not really in the ballpark when I can find 2% pretty easily right now and with rates going up another .50 to .75% after the next Fed meeting in a month and expected to be in the range of 3.50% by year end.

But besides those issues.

You mean 1.5% for any amount of money and then it goes to a tiered rate feature. I do not really understand the promotion or product based on your brief description.

Yes, you are correct. 1.5% for any amount of money and then reverts to a tiered rate product after nine months. Each tier has a unique interest rate. I believe I should disclose an APY that reflects 1.5% for nine months and three months at the market rate dependent on tier, so four total "blended" APYs.

Thoughts, please? Thank you. I am happy to provide additional information as necessary.

Sounds to me that you have a combination of a stepped rate account and a tiered rate account. After six months, the fixed rate steps to a tiered rate product.

I learned one thing in my 40+ years in banking. If you cannot figure out how to advertise a product, your customers will have a hard time figuring it out. Nobody likes these complex account features.

No argument from me! Unfortunately, I do not design the products, I simply have to figure out how to disclose them.

Thanks for the feedback.

Palatability of the product aside, you are correct in thinking you need to apply the "stepped-rate" process to arrive at a blended APY for each tier, using the current rates for the tier to "blend" with the promo rate.

I want to jump in here to ask an additional question if a change of terms notice would be required when the fixed rate period would end.

We are looking at doing the same type of money market account--fixed rate for a length of time on all balances and then after the fixed rate period ends reverting to variable tiered rates. Outside of the issue of calculating the blended APY, would a change in terms notice be needed?

Could you disclose the fixed rate APY at account opening and then provide a change in terms notice 30 days before that period ends and provide the tier information at that time? Or should the initial TISA disclosure include the fixed rate and tier information?

I'm being asked how to do this after the fact, so I'm trying to make sure we are in compliance and covering all my bases.