Reg DD Rounding rules for rates & yields

Regulation DD - 1030.3 (f) Rounding and accuracy rules for rates and yields. Rates should be rounded to the nearest one-hundredth of one percentage point (.01%) and expressed to two decimal places. For account disclosures, the interest rate may be expressed to more than two decimal places.

We have a checking account with a rate of .049% and APY of .05%

Advertisements, rate sheets given to customers and listed on our website should show a rate of .05% and APY of .05% according to 1030.3(f). However, the new account disclosure should show .049% with an APY of .05%.

Am I reading this correctly? It seems deceptive to give a customer something with .049% that changes to .05% on the actual disclosure.

The reason that the interest rate can be express to more than two DPs is because often the disclosure is part of the deposit contract, and you need the accurate interest rate in the contract.

So your disclosure can say 0.049% for the interest rate and 0.05% for the APY. It's the ad that can't reflect the actual interest rate to three DPs. I guess I don't see what the problem is. In normal times when rates are in the 3% range, disclosed interest rates are almost always lower than the disclosed APYs.

Our rate sheet and website list the rate to 3 DPs. Looks like we need change the rate to 2 DPs on both since rate sheets are given to customers sometimes and would then be considered an advertisement. How would you explain the difference to a customer if they questioned why the rate sheet and deposit contract rate are different?

I'd simply say this is the contract rate and the regulation requires that in an ad we round it to the nearest hundredth of a percent. Or you can ditch the interest rate in the ads and show just the APY. Let's face it, the interest rates being advertised these days aren't sexy enough to include in an ad if you don't have to.