Answer by Jim Bedsole: For open-end credit, there is no tolerance. For closed-end credit, it varies depending on the type of transaction. See Reg Z Section 226.22 and Official Staff Commentary for more detail.
Answer by Richard Insley: The basic disclosure tolerance for both open-end and closed-end credit is 1/8% (0.125%) above or below the precise APR. Certain closed-end APR disclosures receive 1/4% (0.25%) disclosure tolerance. See Section 226.22 for details about disclosure tolerances and the interagency enforcement policy for details about reimbursement tolerances.
Answer by Jim Bedsole: Richard is correct. I misread something in the FDIC Compliance Exam manual. There is no finance charge tolerance for open-end credit, but there is an APR tolerance.
First published on BankersOnline.com 9/01/08