Consumer Credit Regulation: 12 C.F.R. § 1026.9 Subsequent disclosure requirements. [§ 226.9]
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(c) Change in terms.
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(2) Rules affecting open-end (not home-secured) plans
(i) Changes where written advance notice is required
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(c) Change in terms.
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(2) Rules affecting open-end (not home-secured) plans
(i) Changes where written advance notice is required
(a) General rule. A creditor shall credit a payment to the consumer’s account as of the date of receipt, except when a delay in crediting does not result in a finance or other charge or except as provided in paragraph (b) of this section.
(b) Specific requirements for payments.
(1) General rule. A creditor may specify reasonable requirements for payments that enable most consumers to make conforming payments.
(a) General rule.
(1)(i) Consideration of ability to pay. A card issuer must not open a credit card account for a consumer under an open-end (not home-secured) consumer credit plan, or increase any credit limit applicable to such account, unless the card issuer considers the consumer’s ability to make the required minimum periodic payments under the terms of the account based on the consumer’s income or assets and the consumer’s current obligations.
(a) Limitations prior to account opening and during first year after account opening.
(a) General rule. Except as provided in paragraph (b) of this section, when a consumer makes a payment in excess of the required minimum periodic payment for a credit card account under an open-end (not home-secured) consumer credit plan, the card issuer must allocate the excess amount first to the balance with the highest annual percentage rate and any remaining portion to the other balances in descending order based on the applicable annual percentage rate.
(b) Special rules.
(a) Limitations on imposing finance charges as a result of the loss of a grace period.
(1) General rule. Except as provided in paragraph (b) of this section, a card issuer must not impose finance charges as a result of the loss of a grace period on a credit card account under an open-end (not home-secured) consumer credit plan if those finance charges are based on:
(i) Balances for days in billing cycles that precede the most recent billing cycle; or
(a) General rule. Except as provided in paragraph (b) of this section, a card issuer must not increase an annual percentage rate or a fee or charge required to be disclosed under § 1026.6(b)(2)(ii), (b)(2)(iii), or (b)(2)(xii) on a credit card account under an open-end (not home-secured) consumer credit plan.
(a) Definition. For purposes of this section, the term over-the-limit transaction means any extension of credit by a card issuer to complete a transaction that causes a consumer’s credit card account balance to exceed the credit limit.
(b) Opt-in requirement.
(1) General. A card issuer shall not assess a fee or charge on a consumer’s credit card account under an open-end (not home-secured) consumer credit plan for an over-the-limit transaction unless the card issuer:
(a) Definitions.
(1) College student credit card. The term college student credit card as used in this section means a credit card issued under a credit card account under an open-end (not home-secured) consumer credit plan to any college student.
(2) College student. The term college student as used in this section means a consumer who is a full-time or part-time student of an institution of higher education.
(a) General rule.
(1) Evaluation of increased rate. If a card issuer increases an annual percentage rate that applies to a credit card account under an open-end (not home-secured) consumer credit plan, based on the credit risk of the consumer, market conditions, or other factors, or increased such a rate on or after January 1, 2009, and 45 days’ advance notice of the rate increase is required pursuant to § 1026.9(c)(2) or (g), the card issuer must:
(a) General rules. The card issuer shall provide the disclosures required under this section on or with a solicitation or an application to open a credit or charge card account.
Citations are to the CFPB commentary, 12 C.F.R. pt. 1026, supp. I with citations to the FRB commentary, 12 C.F.R. pt. 226, supp. I in brackets, e.g., 1026.2 [226.2].
1. Intervals. In open-end credit plans, the billing cycle determines the intervals for which periodic disclosure statements are required; these intervals are also used as measuring points for other duties of the creditor. Typically, billing cycles are monthly, but they may be more frequent or less frequent (but not less frequent than quarterly).
1. Business function test. Activities that indicate that the creditor is open for substantially all of its business functions include the availability of personnel to make loan disbursements, to open new accounts, and to handle credit transaction inquiries.
1. General rule. A cardholder is a natural person at whose request a card is issued for consumer credit purposes or who is a co-obligor or guarantor for such a card issued to another. The second category does not include an employee who is a co-obligor or guarantor on a card issued to the employer for business purposes, nor does it include a person who is merely the authorized user of a card issued to another.
1. Components. This amount is a starting point in computing the amount financed and the total sale price under § 1026.18 for credit sales. Any charges imposed equally in cash and credit transactions may be included in the cash price, or they may be treated as other amounts financed under § 1026.18(b)(2).
2. Service contracts. Service contracts include contracts for the repair or the servicing of goods, such as mechanical breakdown coverage, even if such a contract is characterized as insurance under state law.
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Paragraph 2(a)(17)(iii)
[65 Fed. Reg. 17,131 (Mar. 31, 2000); 67 Fed. Reg. 16,982 (Apr. 9, 2002); 69 Fed. Reg. 16769 (Mar. 31, 2004); 73 Fed. Reg. 44 (July 30, 2008); 74 Fed. Reg. 5244 (Jan. 29, 2009); 74 Fed. Reg. 23,302 (May 19, 2009); 74 Fed. Reg. 41,248 (Aug. 14, 2009); 75 Fed. Reg. 7848 (Feb. 22, 2010); 75 Fed. Reg. 7925 (Feb. 22, 2010); 76 Fed. Reg. 18,363 (Apr. 4, 2011); 76 Fed. Reg. 23,005 (Apr. 25, 2011); 76 Fed. Reg. 79,772 (Dec. 22, 2011); 78 Fed. Reg. 79,730 (Dec. 31, 2013); 81 Fed. Reg. 72,160 (Oct. 19, 2016); 81 Fed. Reg. 84,369 (Nov. 22, 2016); 82 Fed. Reg. 18,975 (Apr. 25, 2017); 82 Fed. Reg.
1. Changes initially disclosed. Except as provided in § 1026.9(g)(1), no notice of a change in terms need be given if the specific change is set forth initially consistent with any applicable requirements, such as rate or fee increases upon expiration of a specific period of time that were disclosed in accordance with § 1026.9(c)(2)(v)(B) or rate increases under a properly disclosed variable-rate plan in accordance with § 1026.9(c)(2)(v)(C). In contrast, notice must be given if the contract allows the creditor to increase a rate or fee at its discretion.
1. Affected consumers. Change-in-terms notices need only go to those consumers who may be affected by the change. For example, a change in the periodic rate for check overdraft credit need not be disclosed to consumers who do not have that feature on their accounts. If a single credit account involves multiple consumers that may be affected by the change, the creditor should refer to § 1026.5(d) to determine the number of notices that must be given.
1. Changing margin for calculating a variable rate. If a creditor is changing a margin used to calculate a variable rate, the creditor must disclose the amount of the new rate (as calculated using the new margin) in the table described in § 1026.9(c)(2)(iv), and include a reminder that the rate is a variable rate.
1. Changes not requiring notice. The following are examples of changes that do not require a change-in-terms notice:
i. A change in the consumer’s credit limit except as otherwise required by § 1026.9(c)(2)(vi).
ii. A change in the name of the credit card or credit card plan.
iii. The substitution of one insurer for another.
iv. A termination or suspension of credit privileges.