Truth in Lending: 6.8.3.3.2 Convenience check disclosures of promotional and nonpromotional annual percentage rates
If the convenience checks offer a promotional rate, the convenience check disclosures must include:1732
If the convenience checks offer a promotional rate, the convenience check disclosures must include:1732
In addition to promotional and non-promotional APRs, convenience check disclosures must include:
Changes in the terms of open-end credit, especially for credit card accounts, are a common occurrence. Many credit card issuers place extremely expansive change-in-term provisions in their credit card agreements, which allow the issuers to change any of the terms in the agreement at any time.1747
The Credit CARD Act of 2009 specifically requires credit card issuers to provide forty-five days’ notice for any increases in the APR1750 and any significant changes in terms for credit card accounts.1751 The Credit CARD Act provisions do not apply to open-end credit accounts that are not credit cards, but Regulation Z requires the same notice for all open-end credit except for HELOCs.1752 The forty-five-day notice requirement does not apply
Creditors are required to disclose a summary of the changes using a table format similar to credit card application/solicitation table and account-opening table.1754 If the change-in-terms notice is included on or with the periodic statement, the tabular summary of the change must be disclosed on the front of any page of the statement, along certain other information.1755 This notice must be substantially similar to model form G-20 in appendix G of Regulation Z.
For most changes, the change-in-terms notice must be given or mailed at least forty-five days before the effective date of the change.1762 Some changes require a notice, but the notice can be given as late as the effective date of the change or before the first use of a feature. These changes can be disclosed orally or electronically instead of being disclosed in writing.
A change-in-terms notice is required forty-five days in advance of any increase in the annual percentage rate.1772
Creditors do not need to give advance notice of any change in a charge or fee, or even the addition of a new charge, if the change is not considered “significant.”1783 Significant changes are listed at § 6.8.4.4.1, supra.
The creditor can mail or deliver a notice as late as the effective date of a change, if the consumer had agreed to the particular change.1786 This exception only applies when a consumer substitutes collateral or when the creditor can advance additional credit only if a change relatively unique to that consumer is made, such as the consumer’s providing additional security or paying an increased minimum payment amount.1787
No notice of a change in terms is required if the specific change is set forth initially in the account-opening agreement, such as a rate increase pursuant to a variable-rate plan, provided that the required disclosures are given.1790 A general contract reservation in the account-opening disclosures that the creditor may change the terms is not such an explanation.1791 But if the plan is a variable rate plan in which changes are tied to an index and disclosed in the initial statement, advanc
An increase in an APR or in certain fees does not require a change-in-terms notice when the increase is due to the expiration of a promotional rate or fee.1808 The promotional time period and the “post-promotional” rate or fee must have been properly disclosed.1809 The increased APR or fee must not exceed the disclosed “post-promotional” rate or fee.1810 This exception parallels the promotional rate and fee exception established by the Credit
For credit cards and other types of open-end (not home-secured) credit, an increase in an APR does not require a change-in-terms notice when the increase is due to a variable APR.1821 The increase must result from the operation of an index that is not under the control of the creditor and is available to the general public.1822
An increase in an APR or fee does not require a change-in-terms notice when the increase is due to the completion of or failure to comply with a workout or temporary hardship arrangement.1828 However, the increased APR or must not exceed the APR or fee that applied before commencement of the arrangement.1829 The creditor must have provided the consumer with a clear and conspicuous written disclosure of the terms of the arrangement, including disclosure of APR increases that would be triggere
The creditor is not required to provide a change-in-terms notice when it initially allows customers to skip or reduce payments, or temporarily reduces finances charges other than the interest rate.1834 Some creditors extend this privilege during the holiday shopping period.
If a change is applicable only to convenience checks, i.e., checks that access a credit card account, the issuer is not required to provide a change-in-terms notice if issuer makes the proper convenience check disclosures on or with the check.1845
A change-in-terms notice is not required for certain other changes as well:
The change-in-terms notice must contain the following information:
The critical disclosure in a change-in-terms notice is the summary of changes. It is this disclosure that must be disclosed in a tabular format.1865
The format and content of the disclosure is the same as the disclosures required for the account-opening table.1866 However, a tabular format is not required for:1867
If the change in terms is a rate increase for a credit card account under an open-end (not home-secured) consumer credit plan,1879 the issuer must disclose no more than four of the principal reasons for the increase.1880 These reasons must be listed in order of importance.1881 There is no minimum number of reasons that must be disclosed,1882 although presumably at least one reason must be give
The ability of creditors to make changes in the terms of an open-end credit contract is mostly derived from state laws that have extremely permissive provisions allowing such changes.1890 TILA itself is not a source of authority for the ability of creditors to make changes in terms.1891 A discussion of when unilateral changes in terms are permitted, and their abuses, is found in another treatise in this series.1892
If the creditor cannot prove that it actually sent the change-in-terms notice to the consumer, the notice may be ineffective under the contract to change the terms.1906 Unfortunately, the creditor is only required to establish that it sent the notice, and need not prove that the consumer actually received the notice.1907 However, simply showing that a creditor’s normal business practice is to send a notice may not be sufficient; the creditor should also show that the particular notice at iss
TILA, as amended by the Credit CARD Act of 2009, requires creditors to provide forty-five days’ notice before increasing the APR for a credit card account.1909 This provision applies regardless of whether the increase is permitted under the terms of the contract.