Applications and Solicitations

Credit Cards

Applications and Solicitations

General Information

Required on or with any application or solicitation for a consumer credit card.
Required table disclosure must be provided in a prominent location on or with the application or solicitation.
The disclosures may be provided electronically as long as they are given in close proximity to the application or solicitation.
“Solicitation” means an offer by the card issuer to open a credit or charge card account that does not require the consumer to complete an application (a “firm offer” of credit).

Table

A tabular format with specific headings, content and formatting is required.

Bolding

The following terms in the table must be bolded:

Annual Percentage Rates (the APR for purchases must also be in 16 pt. font)
The following fees:
Issuance or availability
Transaction charges
Cash advance
Late payment
Over-the-limit
Balance transfer
Returned payment

Do Not Bold

Do not bold the following:

Fixed finance charges
Minimum interest charges
Any periodic charges that are not annualized

In-Table Disclosures

Disclose the following terms and information within the table.

Annual Percentage Rates

Disclose each periodic rate that may be used to compute the finance charge on an outstanding balance for purchases, a cash advance, or a balance transfer, expressed as an annual percentage rate.
When more than one rate applies for a category of transactions, disclose the range of balances to which each rate is applicable.

Variable Rates

For variable rates, disclose the fact that the rate may vary and how the rate is determined by identifying the type of index or formula that is used in setting the rate.

Do not disclose the value of the index and the amount of the margin in the table.
Do not disclose limitations on rate increases or decreases in the table.

Introductory Rates

If the initial rate is an introductory rate you must disclose the following:
The introductory rate
The time period during which the introductory rate will remain in effect
The rate that would otherwise apply to the account

You must use the term “introductory” or “intro” in immediate proximity to the introductory rate

Premium Rates

If the initial rate is temporary and is higher than the rate that will apply after the temporary rate expires, you must disclose:
The premium initial rate
The time period during which the premium initial rate will remain in effect.
The premium initial rate for purchases must be in at least 16-point type.

Penalty Rates

If a rate may increase as a penalty for one or more events specified in the account agreement, you must disclose:
The increased rate that may apply.
A brief description of the event or events that may result in the increased rate.
A brief description of how long the increased rate will remain in effect.

Fees for Issuance or Availability

You must disclose any annual or other periodic fee that may be imposed for the issuance or availability of an open-end plan.

Include any fee based on account activity or inactivity, how frequently it will be imposed, and the annualized amount of the fee.
For any non-periodic fees that relates to opening the plan, you must disclose that the fee is a one-time fee.

Fixed Finance Charge or Minimum Interest Charge

Disclose any fixed finance charge and a brief description of the charge.
Disclose any minimum interest charge if it exceeds $1.00 that could be imposed during a billing cycle, and a brief description of the charge.

Transaction Charges

Disclose any transaction charge imposed for purchases.

Grace Period

Disclose the date by which or the period within which any credit extended may be repaid without incurring a finance charge and any conditions on the availability of the grace period.
If no grace period is provided, you must disclose that fact.
If the length of the grace period varies, you may disclose the range of days, the minimum number of days, or the average number of the days in the grace period, if the disclosure is identified as a range, minimum, or average.
You must use the phrase “How to Avoid Paying Interest” as the heading for the row describing the grace period if the grace period applies to all features of the account.
Use the phrase “Paying Interest” on the heading row if a grace period is not offered on all features of the account.

Fees

Disclose the following fees:

Cash advance fees
Late payment fees
Over-the-limit fees
Balance transfer fees
Returned-payment fees

Required Insurance, Debt Cancellation or Debt Suspension Coverage

Disclose any fees for required insurance.
Include a cross reference to any additional information provided about the insurance or coverage, as applicable.

Available Credit

This disclosure is required if you require fees for the issuance or availability of credit and/orrequire a security deposit, and the total amount of the required fees and/or security deposit that will be imposed and charged to the account when the account is opened is 15 percent or more of the minimum credit limit for the plan. When this is the case you must provide the following disclosures:

The available credit remaining after these fees or security deposit are debited to the account.
The fact that the consumer has the right to reject the plan and not be obligated to pay the fees or any other fee or charges until the consumer has used the account or made a payment on the account after receiving a periodic statement.
These disclosures are not required if fees or security deposits are not debited to the account.

Web site Reference

Include a reference to the Web site established by the Federal Reserve Board and a statement that consumers may obtain on the Web site information about shopping for and using credit cards.

Directly Below the Table

Disclose the following directly below the table.

Introductory Rates

If you disclose an introductory rate, you must disclose:

The circumstances under which the introductory rate may be revoked.
The rate that will apply after the introductory rate is revoked.

Employee Preferential Rates

If you disclose a preferential annual percentage rate for employees (or others with similar affiliation) you must briefly disclose:

The circumstances under which such preferential rate may be revoked.
The rate that will apply after such preferential rate is revoked.

Balance Computation Method

Disclose the name of the balance computation method that is used to determine the balance on which the finance charge is computed for each feature.

Disclosure Methods

Direct Mail and Electronic

You must disclose all of the applicable disclosures on or with any application or solicitation that is mailed to members.
These disclosures must be accurate as of the time of mailing except for the APR, which must be one that was in effect within 60 days before the date ofmailing.
Disclosures provided in electronic form must be accurate as of the time they are sent.
Direct mail requirements apply only to mailings sent directly to individual members.

Telephone

Requirements apply to any credit union-initiated telephone contact during which you take application information or offer to open a credit card account without an application (a “preapproved” telephone solicitation).

The credit union must disclose orally the same terms that must be in tabular form for direct mailings.

Telephone Alternative

An alternative is permitted if:
You do not impose a periodic or one-time fee for the issuance or availability of a card, or
You do not impose such a fee until the member accepts the card by using it.
In this case, the credit union is not required to give oral disclosures, but must:
Send written disclosure of all of the applicable terms, in tabular form where required, within 30 days after the customer requests the card, but no later than the delivery of the card.
Explain in the disclosures that the member is not obligated to accept the card or to pay any disclosed fee unless they choose to accept the card by using it.

Applications Made Available to the General Public

Applications or solicitations that are made available to the general public include “take ones” and those contained in catalogs, magazines, and other generally available publications.

Applications available only at the member’s request are not considered to be generally available.
You may provide disclosures in any of three ways:

Provide all of the “direct mail” disclosures in the required format in a prominent location on or with all generally available applications and solicitations. You must indicate:
That disclosures are accurate as of the date printed.
The date of printing (month and year).
That terms are subject to change after that date.
That members should contact the credit union for any changes.(You must provide either a mailing address or a toll-free telephone number for nonlocal calls through which members can obtain information about changes in the disclosures.)
Provide current initial disclosures
Provide a statement on or with the application or solicitation that there are costs associated with the use of the credit card, and the member should contact the credit union for specific information. (Both a mailing address and a toll-free number must be provided.)
A credit union may not use this option if any of the “direct mail” disclosures are included on or with the application or solicitation.

Regardless of the option used, the credit union must provide all of the required disclosures promptly upon receiving a request from a customer for the information.
The credit union could respond to the member either orally or in writing.
If responding in writing, you may do so by using the general content and format for either the “specific information” or the “current initial disclosures” options discussed above.
Information provided in writing need not be in tabular form.

Electronic Applications

Disclosures must be accessible at the time a blank application or reply form is provided through electronic communication.
Credit unions may provide a link to the electronic disclosures on or with the application (or reply form) as long as members cannot bypass those disclosures before submitting the application or reply form.
If a link is not provided, the application or reply form must clearly and conspicuously refer to the fact that rate, fee, and other cost information either precedes or follows the application or reply form.
Another option would be to have the disclosures automatically appear on the screen when the application or reply form appears.
Confirmation that the member has read the disclosures is not required.

When variable rate disclosures are provided by electronic communication, the APR is considered accurate if the rate was in effect within 30 days before sending the disclosures to the member’s e-mail address.
Disclosures that are available at another location, such as the credit union Web site, must use the APR in effect within the last 30 days.

Periodic Statements

Credit card periodic statements are the same as those required for other open-end lines of credit (except HELOCs). However, the following additional requirements apply.

Formatting Requirements

The following formatting requirements apply:

The due date must be disclosed on the front of the first page of the periodic statement.
The amount of the late payment fee and the annual percentage rate(s) must be stated in close proximity to the due date.
The ending balance and the repayment disclosures must be disclosed closely proximate to the minimum payment due.
The due date, late payment fee and annual percentage rate, ending balance, minimum payment due, and must be grouped together.
Sample G-18(D) in Appendix G to demonstrates of how these terms may be grouped.

Due date

Disclose the due date for a payment.
This disclosure is not required for charged-off account where payment of the entire account balance is due immediately.

Late Payment Costs

Disclose the amount of any late payment fee and any increased periodic rate(s) (expressed as an annual percentage rate(s)) that may be imposed on the account as a result of a late payment.
If a range of late payment fees may be assessed, the card issuer may state the range of fees, or the highest fee and an indication that the fee imposed could be lower.
If the rate may be increased for more than one feature or balance, the card issuer may state the range of rates or the highest rate that could apply and at the issuer’s option an indication that the rate imposed could be lower.
This disclosure is not required for charged-off account where payment of the entire account balance is due immediately.

Repayment Disclosures

A card issuer must provide the following disclosures on each periodic statement:

The following statement with a bold heading: “Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance”
The minimum payment repayment estimate, as described in Appendix M1 to Reg Z.
If the minimum payment repayment estimate is less than 2 years, the card issuer must disclose the estimate in months.
Otherwise, the estimate must be disclosed in years and rounded to the nearest whole year.
The minimum payment total cost estimate, rounded either to the nearest whole dollar or to the nearest cent.
A statement that the minimum payment repayment estimate and the minimum payment total cost estimate are based on the current outstanding balance shown on the periodic statement.
A toll-free telephone number where the consumer may obtain from the card issuer information about credit counseling services.
The estimated monthly payment for repayment in 36 months rounded either to the nearest whole dollar or to the nearest cent.
A statement that the card issuer estimates that the consumer will repay the outstanding balance shown on the periodic statement in 3 years if the consumer pays the estimated monthly payment each month for 3 years.
The total cost estimate for repayment in 36 months rounded either to the nearest whole dollar or to the nearest cent.
The savings estimate for repayment in 36 months rounded either to the nearest whole dollar or to the nearest cent.

Repayment Disclosures Not Required

Minimum Repayment Estimate is Three Years or Less

The monthly payment and total costs to repay the balance in 36 months do not have to be disclosed if the minimum repayment estimate is three years or less.
This three-year threshold is calculated after rounding, which means a repayment estimate of up to 3 years and 5 months would meet this threshold.

The Monthly “36-month” Repayment is Less than the Minimum Monthly Payment

The monthly payment and total cost to repay the balance in 36 months also does not have to be disclosed if that monthly payment, rounded to the nearest whole dollar, is less than the minimum monthly payment.
There must also be an express statement on the periodic statement that the card issuer estimates the consumer will repay the outstanding balance in three years if the consumer pays the estimated monthly payment for three years.
The card issuer must disclose on the periodic statement the savings estimate for repaying the balance in 36 months, which will be the difference between the total cost estimate of repaying the balance by making minimum payments and the total cost estimate by making the payments required to pay off the balance in 36 months.

Negative Amortization

If negative amortization or no amortization occurs, then the following has to be disclosed on the periodic statement in lieu of the repayment information:

The following warning statement (in bold as shown): “Minimum Payment Warning: Even if you make no more charges using this card, if you make only the minimum payment each month we estimate you will never pay off the balance shown on this statement because your payment will be less than the interest charged each month.”
The following statement: “If you make more than the minimum payment each period, you will pay less in interest and pay off your balance sooner.”
The estimated monthly payment to repay the balance in 36 months, although the total cost estimate would not be disclosed.
The fact that the consumer will repay the balance shown in three years if the consumer pays this estimated monthly payment for three years.
The toll-free telephone number for obtaining more information about credit counseling services.

Change in Terms

The following additional disclosures are required for a change in terms affecting a credit card account.