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Consumer Banking and Payments Law: (a)(2) Requests.

Paragraph (a)(2)(i).

1. Inquiries versus requests. A response to an oral inquiry (by telephone or in person) about rates and yields or fees does not trigger the duty to provide account disclosures. But when consumers ask for written information about an account (whether by telephone, in person, or by other means), the institution must provide disclosures unless the account is no longer offered to the public.

Consumer Banking and Payments Law: (b)(1)(i) Annual percentage yield and interest rate.

1. Rate disclosures. In addition to the interest rate and annual percentage yield, institutions may disclose a periodic rate corresponding to the interest rate. No other rate or yield (such as “tax effective yield”) is permitted. If the annual percentage yield is the same as the interest rate, institutions may disclose a single figure but must use both terms.

Consumer Banking and Payments Law: (b)(1)(ii) Variable rates.

Paragraph (b)(1)(ii)(B).

1. Determining interest rates. To disclose how the interest rate is determined, institutions must:

i. Identify the index and specific margin, if the interest rate is tied to an index.

ii. State that rate changes are within the institution’s discretion, if the institution does not tie changes to an index.

Paragraph (b)(1)(ii)(C).

Consumer Banking and Payments Law: (b)(2)(ii) Effect of closing an account.

1. Deeming an account closed. An institution may, subject to state or other law, provide in its deposit contracts the actions by consumers that will be treated as closing the account and that will result in the forfeiture of accrued but uncredited interest. An example is the withdrawal of all funds from the account prior to the date that interest is credited.

Consumer Banking and Payments Law: (b)(3)(ii) Balance computation method.

1. Methods and periods. Institutions may use different methods or periods to calculate minimum balances for purposes of imposing a fee (the daily balance for a calendar month, for example) and accruing interest (the average daily balance for a statement period, for example). Each method and corresponding period must be disclosed.

Consumer Banking and Payments Law: (b)(3)(iii) When interest begins to accrue.

1. Additional information. Institutions may disclose additional information such as the time of day after which deposits are treated as having been received the following business day, and may use additional descriptive terms such as “ledger” or “collected” balances to disclose when interest begins to accrue.

Consumer Banking and Payments Law: (b)(4) Fees.

1. Covered fees. The following are types of fees that must be disclosed:

i. Maintenance fees, such as monthly service fees.

ii. Fees to open or to close an account.

iii. Fees related to deposits or withdrawals, such as fees for use of the institution’s ATMs.

Consumer Banking and Payments Law: (b)(5) Transaction limitations.

1. General rule. Examples of limitations on the number or dollar amount of deposits or withdrawals that institutions must disclose are:

i. Limits on the number of checks that may be written on an account within a given time period.

ii. Limits on withdrawals or deposits during the term of a time account.

Consumer Banking and Payments Law: (b)(6)(ii) Early withdrawal penalties.

1. General. The term “penalty” may but need not be used to describe the loss of interest that consumers may incur for early withdrawal of funds from time accounts.

2. Examples. Examples of early withdrawal penalties are:

i. Monetary penalties, such as “$10.00” or “seven days’ interest plus accrued but uncredited interest.”

Consumer Banking and Payments Law: (b)(6)(iv) Renewal policies.

1. Rollover time accounts. Institutions offering a grace period on time accounts that automatically renew need not state whether interest will be paid if the funds are withdrawn during the grace period.

2. Nonrollover time accounts. Institutions paying interest on funds following the maturity of time accounts that do not renew automatically need not state the rate (or annual percentage yield) that may be paid. (See Appendix B, Model Clause B-1(h)(iv)(2).)

Consumer Banking and Payments Law: (a)(1) Advance notice required.

1. Form of notice. Institutions may provide a change-in-term notice on or with a periodic statement or in another mailing. If an institution provides notice through revised account disclosures, the changed term must be highlighted in some manner. For example, institutions may note that a particular fee has been changed (also specifying the new amount) or use an accompanying letter that refers to the changed term.

Consumer Banking and Payments Law: (a)(2) Amount of interest.

1. Accrued interest. Institutions must state the amount of interest that accrued during the statement period, even if it was not credited.

2. Terminology. In disclosing interest earned for the period, institutions must use the term “interest” or terminology such as:

i. “Interest paid,” to describe interest that has been credited.

ii. “Interest accrued” or “interest earned,” to indicate that interest is not yet credited.

Consumer Banking and Payments Law: (a)(4) Length of period.

1. General. Institutions providing the beginning and ending dates of the period must make clear whether both dates are included in the period.

2. Opening or closing an account mid-cycle. If an account is opened or closed during the period for which a statement is sent, institutions must calculate the annual percentage yield earned based on account balances for each day the account was open.

Consumer Banking and Payments Law: (b) Special rule for average daily balance method.

1. Monthly statements and quarterly compounding. This rule applies, for example, when an institution calculates interest on a quarterly average daily balance and sends monthly statements. In this case, the first two monthly statements would omit annual percentage yield earned and interest earned figures; the third monthly statement would reflect the interest earned and the annual percentage yield earned for the entire quarter.

Consumer Banking and Payments Law: (a)(1) Permissible methods.

1. Prohibited calculation methods. Calculation methods that do not comply with the requirement to pay interest on the full amount of principal in the account each day include:

i. Paying interest on the balance in the account at the end of the period (the “ending balance” method).

ii. Paying interest for the period based on the lowest balance in the account for any day in that period (the “low balance” method).

Consumer Banking and Payments Law: (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.

2. Average daily balance accounts. Institutions that require a minimum balance may choose not to pay interest for the period in which the balance drops below the required minimum, if they use the average daily balance method to calculate interest.

Consumer Banking and Payments Law: (b) Compounding and crediting policies.

1. General. Institutions choosing to compound interest may compound or credit interest annually, semi-annually, quarterly, monthly, daily, continuously, or on any other basis.

2. Withdrawals prior to crediting date. If consumers withdraw funds (without closing the account) prior to a scheduled crediting date, institutions may delay paying the accrued interest on the withdrawn amount until the scheduled crediting date, but may not avoid paying interest.

Consumer Banking and Payments Law: (c) Date interest begins to accrue.

1. Relation to Regulation CC. Institutions may rely on the Expedited Funds Availability Act (EFAA) and Regulation CC (12 CFR part 229) to determine, for example, when a deposit is considered made for purposes of interest accrual, or when interest need not be paid on funds because a deposited check is later returned unpaid.

2. Ledger and collected balances. Institutions may calculate interest by using a “ledger” or “collected” balance method, as long as the crediting requirements of the EFAA are met (12 CFR 229.14).

Consumer Banking and Payments Law: (a) Misleading or inaccurate advertisements.

1. General. All advertisements are subject to the rule against misleading or inaccurate advertisements, even though the disclosures applicable to various media differ.

2. Indoor signs. An indoor sign advertising an annual percentage yield is not misleading or inaccurate when:

i. For a tiered-rate account, it also provides the lower dollar amount of the tier corresponding to the advertised annual percentage yield.