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F ederal reserve Ba n k DALLAS, TEXAS of Dallas 75222 Circular No. 71-l80 August 4, 1971 INTERPRETATION TO REGULATION Z To All Banks, Other Creditors, and Others Concerned in the Eleventh Federal Reserve District: The Board of Governors of the Federal Reserve System announced on July 29, 1971> the adoption of an interpretation of Regulation Z, Truth in Lending, concerning changes in the method of determining the balance on which finance charges are computed on an open end credit account plan. The interpretation is printed on the reverse side of this circular. Yours very truly, P. E. Coldwell President This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM IN T ER PR ETA TIO N O F R E G U L A T IO N Z § 226.705 Open end credit — change in the method of determining the balance on which fi nance charges are computed also provides that prior notice is not required if the only change is a reduction in the “periodic rate or rates, or in any minimum, fixed, check service, transaction, activity, or similar charge (a) The creditor of an open end credit account applicable to the account.” plan desires to change his method of determining the balance on which finance charges are com (b) Where a creditor changes his method of puted from a method in which payments and determining the balance on which finance charges credits made during the billing cycle are not de are computed from a method in which payments ducted in determining such balance to a method and credits made during the billing cycle are not in which such payments and credits are deducted deducted in determining such balance, to a method in determining such balance. This change results in which such payments and credits are deducted in a reduction in finance charges to the customer, in determining such balance, § 226.7(e) requires where full payment of the account is deferred. no prior notice of such change in terms, provided no other changes in terms applicable to the ac The question arises whether notice of such change count are made sim ultaneously which would is required to be sent to customers of open end require § 226.7(e) notification. credit accounts under § 226.7(e), since that Section 7/29/71