Full text of Federal Reserve Bank of New York Circulars : 10729. Truth in Savings

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FEDERAL RESERVE BANK
OF NEW YORK

C ircular N o.

[

10729 ~
1

A u g u st 2 5 , 1 9 9 4

TRUTH IN SAVINGS
Official Staff Commentary to Regulation DD
To All Depository Institutions in the Second Federal
Reserve District, and Others Concerned:

The following statement has been issued by the Board of Governors of the
Federal Reserve System:
The Federal Reserve Board has issued an official staff commentary to Regulation
DD, Truth in Savings. The commentary applies and interprets the requirements of the
regulation and is a substitute for individual staff interpretations. The commentary
incorporates much of the guidance provided when the regulation was adopted, and
addresses additional questions raised since that time.
The commentary is effective immediately, but compliance is optional until
February 6, 1995.

Enclosed is the text of the Official Staff Commentary to Regulation DD, “Truth
in Savings,” which has been reprinted from the Federal Register of August 8, 1994.
Questions thereon may be directed to our Compliance Examinations Department
(Tel. No. 212-720-5914).

W il l ia m J. M c D o n o u g h ,

President.

/O ft2?

>

Monday
August 8, 1994
Vol. 59, No. 151
Pp. 40217-28

:

OFFICIAL STAFF COMMENTARY TO
REGULATION DD —
TRUTH IN SAVINGS

Effective August 3, 1994; compliance optional
until February 6, 1995

,

J

[Enc. Cir. No. 10729]



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Federal Register / Vol. 59, No. 151 / Monday, August 8, 1994 / Rules and Regulations

foreign currency and held by consumers
as an example of accounts covered by
the regulation. Foreign currency
The purpose of the Truth in Savings
accounts were not mentioned in the
Act (12 U.S.C. 4301 et seq.) is to assist
proposal. Comment 230.2(a)-l now lists
consumers in comparing deposit
foreign currency accounts among the
accounts offered by depository
examples of covered accounts, but the
institutions. The act requires
addition is not specifically mentioned
institutions to disclose fees, the interest in the supplementary information
rate, the annual percentage yield (APY), accompanying paragraph 2(a).
and other account terms whenever a
Additions such as this were added in
consumer requests the information and
response to commenters’ requests. Many
before an account is opened. Fees and
comments have been renumbered,
other information also must be provided pursuant to the Federal Register’s new
on any periodic statement sent to the
publication rules.
consumer. Rules are set forth for deposit
On May 11,1994, the Board
account advertisements and advance
published a proposal to amend the
notices to account holders of adverse
regulation’s rules regarding crediting
changes in terms. The act restricts how
and compounding practices (59 FR
institutions determine the account
24378). The proposal also has the effect
balance on which interest is calculated.
of producing an annual percentage yield
The act is implemented by the Board’s
(APY) that reflects the time value of
Regulation DD (12 CFR part 230), which money. On July 11,1994, the Board
became effective on June 21,1993. The
published a notice extending to
regulation authorizes the issuance of
September 6,1994, the comment period
official staff interpretations of the
for the May proposal (59 FR 35271). At
regulation. (See Appendix D to
the same time, the Board solicited
Regulation DD.)
comment on an alternative approach for
calculating the APY. The approach
II. Commentary
would allow institutions to disclose an
On February 7,1994, the Board
APY equal to the interest rate on time
published for comment a proposed
accounts with maturities greater than
commentary to Regulation DD (59 FR
one year and that do not compound
5536). The commentary is designed to
interest but pay interest at least
provide guidance to depository
institutions in applying the regulation to annually. The Board has deferred
adopting commentary on provisions of
specific transactions and is a substitute
the regulation affected by the proposal,
for individual staff interpretations. The
pending final action by the Board.
Board received about 150 comments,
mostly from depository institutions and S e c tio n 2 3 0 .2 — D e fin itio n s
trade associations. Commenters
(a) Account
generally supported the proposal.
In large measure, the commentary
Comment 2(a)-l provides examples of
incorporates supplementary information accounts subject to the regulation. The
Board proposed to narrow the
accompanying prior rulemakings, and
reflects the views expressed therein
regulation’s coverage of trust accounts
without substantive change. (See final
to individual retirement accounts (IRAs)
rule published on September 21,1992
and simplified employee pension (SEP)
(57 FR 43337), correction notice
accounts, to minimize compliance
published on October 9,1992 (57 FR
burdens for institutions.
Many commenters supported the
46480), and amendments published on
Board’s general approach, but
March 19,1993 (58 FR 15077).) The
questioned whether the regulation
commentary also addresses issues that
should exclude accounts held by
have arisen since the publication of the
individuals pursuant to informal trust
regulation and technical suggestions or
arrangements such as “Totten” or
concerns raised by commenters.
To avoid unnecessary detail, the
payable on death (POD) trusts.
discussion accompanying the final
Commenters noted the purpose of a
commentary does not individually
Totten trust is to avoid probate
mention technical amendments that
proceedings to transfer funds remaining
clarify the proposed text but make no
in an account upon a depositor’s death.
substantive change in meaning.
Commenters also noted the account’s
Similarly, additions to the final
signature card is often the sole evidence
commentary of information previously
of the trust relationship. These
published are not separately noted. For
commenters believed consumers
example, the supplementary
opening Totten and POD trust accounts
information accompanying the
should be afforded the act’s protections.
September 1992 rulemaking discussed
The Board concurs, and the commentary
deposit accounts denominated in
reflects this approach.
SUPPLEMENTARY INFORMATION:

I. Background

FEDERAL RESERVE SYSTEM
12 CFR Part 230
[Regulation DD; Docket No. R-0824]

Truth in Savings
AGENCY: Board of Governors of the
Federal Reserve System.
ACTION:

Final rule; interpretation.

SUMMARY: The Board is publishing its
official staff commentary to Regulation
DD (Truth in Savings). The commentary
applies and interprets the requirements
of Regulation DD and is a substitute for
individual staff interpretations. The
commentary incorporates much of the
guidance provided when the regulation
was adopted, and addresses additional
questions raised since that time.

This rule is effective August 3,
1994. Compliance is optional until
February 6,1995.

DATES:

FOR FURTHER INFORMATION CONTACT: Jane
Ahrens, Senior Attorney, or Kyung Cho
or Kurt Schumacher, Staff Attorneys,
Division of Consumer and Community
Affairs, Board of Governors of the
Federal Reserve System, at (202) 4523667 or 452-2412; for the hearing
impaired o n ly , Dorothea Thompson,
Telecommunications Device for the
Deaf, at (202) 452-3544.




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Federal Register / Vol. 59, No. 151 / Monday, August 8, 1994 / Rules and Regulations

(b) Advertisement
Comment 2(b)-l illustrates the scope
of commercial messages considered to
be advertisements. The Board proposed
that advertisements would not include
direct oral discussions conducted in
person regarding a specific account.
Many commenters urged the Board to
expand the interpretation to include
telephone conversations about specific
accounts. The Board has retained the
provision as proposed. The Board
believes face-to-face discussions allow
prospective customers to learn easily
and quickly about basic terms of the
account (thus, fulfilling the purpose of
advertising disclosures). Also, at any
time during a face-to-face conversation,
consumers may request and receive
written disclosures at that time. This is
not the case for conversations by
telephone. Thus, the commentary
clarifies that except for information
about an existing account, commercial
messages delivered via telephone or
voice response machines are
advertisements.
(f) Bonus
Comment 2(f)-3 has been added to
clarify the rule excluding from bonuses
items of de minimis value ($10 or less).
(See 26 CFR § 1.6049-5(a)(2) published
by the Internal Revenue Service, which
discusses the fair market value of
property received.) Commenters
expressed concern about potential
violations for failing to disclose as a
bonus early in the year an individual
item of de minimis value deemed to be
a bonus when aggregated with another
de minimis item given in a separate
promotional program involving the
same account later in the year. The
comment provides guidance about
aggregating only the market value of
items offered for the same promotional
program. An example illustrating the
rule has been included.
(h) Consumer
An example relating to a landlordtenant relationship in comment 2(h)-2
has been deleted as unnecessary.
The Board proposed two factors to
consider in determining whether an
account is held by an unincorporated
nonbusiness association of natural
persons, and the Board solicited
comments on whether those or
additional factors would be helpful.
Based on the comments received and
further analysis, the Board has adopted
only one factor in comment 2(h)-5.
(p) Passbook Savings Account
Comment 2(p)-l clarifies that
institutions may consider accounts as
“passbook savings” even when direct




deposits are made to the account
electronically. The comment tracks the
requirements of Regulation E (12 CFR
205.9). But accounts that permit other
electronic fund transfers—and thus
trigger Regulation E’s requirement to
send statements at least quarterly—are
not passbook savings accounts, and
institutions must comply with the
periodic statement disclosures in
§ 230.6 of this part. Accounts that send
statements are not passbook savings
accounts for purposes of Regulation DD,
even if consumers are provided with a
booklet for their records.
(r) State
The proposal included examples of
territories and possessions covered by
the act. Commenters requested more
examples. Upon further consideration,
the Board believes a list of all the
territories considered to be “states” is
unnecessary. Thus, the comment has
not been adopted.
(u) Time Account
Comment 2(u)-l has been added to
clarify when club accounts must be
considered time accounts for purposes
of the regulation. Although club
accounts typically have one feature of a
time account (a maturity date), club
accounts are not time accounts unless
they also require a penalty of at least
seven days’ interest for a withdrawal of
funds during the first six days after the
account is opened—subject to
exceptions permitted in Regulation D
(as discussed in comment 2(u)-2).
(v) Variable-Rate Account
Comment 2(v)-l clarifies that a
certificate of deposit (CD) permitting
one or more rate adjustments prior to
maturity at the consumer’s option is a
variable-rate account. The Board
believes it is important for consumers to
receive disclosures describing when
their interest rate and APY could
change, such as any time limitations on
when the option may be exercised.

Section 230.3—General Disclosure
Requirements
(b) General
Comment 3(b)-l provides guidance on
the specificity required when time
periods are disclosed. For example, the
Board believes slight variations in
compounding cycles are consistent with
the notion of “monthly” cycles, which
are often not based on an actual
calendar month. Many commenters
generally supported the Board’s
approach, but expressed concern about
the proposal’s limitation of 28-33 days
to describe a month. The Board has
adopted a standard of roughly

equivalent intervals occurring during a
calendar year. The Board believes this
standard is consistent with the act,
provides flexibility, and eases
compliance.
(e) Oral Responses to Inquiries
Comment 3(e)-3 has been added in
response to commenters’ requests. It
clarifies that this paragraph does not
apply to responses to requests for rate
information on an existing account.
(f) Rounding and Accuracy Rules for
Rates and Yields
Proposed comment 3(f)(2)-2
(regarding accuracy requirements for
interest rate disclosures) was a
restatement of the regulation and has
been deleted as unnecessary. A
comment illustrating rounding
requirements for the APY has been
added.

Section 230.4—Account Disclosures
(a) Delivery of Account Disclosures
(a)(1) Account Opening
Comment 4(a)(l)-l provides examples
of events that trigger the delivery of new
account disclosures. The final comment
differs from the proposal in several
respects.
The proposed commentary discussed
the effect of a consumer-initiated change
in the term for an automatically
renewable time account. In response to
commenters’ requests, the commentary
clarifies that new account disclosures
are required when the consumer
changes any account term required to be
disclosed (and not merely the duration
of the CD). The clarification provides
consistency with § 230.5(b)-5.
Commenters expressed concern about
having to give new account disclosures
when funds are transferred from one
account to another, such as when funds
in a money market deposit account
(MMDA) are transferred to a NOW
account because the consumer exceeded
transaction limitations on the MMDA.
Some requested clarification that
disclosures at the time of transfer are
not required if disclosures (including
change-in-term notices, if appropriate)
for both accounts had previously been
given. To minimize possible burdens
the Board has adopted that standard in
the commentary.
The Board received many comments
regarding the proposed guidance for
“closed accounts.” New account
disclosures would have been required if
institutions deemed an account closed
and then accepted a deposit from the
consumer. Commenters noted that
consumers with accounts meeting an
institution’s criteria for a closed

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Federal Register / Vol. 59, No. 151 / Monday, August 8, 1994 / Rules and Regulations
account—such as an account having a
$0 balance—do not necessarily intend to
close the account. Commenters believed
consumers would be confused if new
account disclosures were sent when a
deposit is subsequently made.
Commenters also expressed concerns
about the burden of monitoring
accounts to ensure compliance.
The statute allows institutions not to
pay accrued but uncredited interest
when a consumer closes an account.
(See 12 U.S.C. 4303(c)(9).) Based on
comments received and upon further
analysis, the Board believes that if an
institution deems an account closed and
treats accrued but uncredited interest as
forfeited by the consumer, the
institution must deem a new account to
be opened when a deposit is
subsequently accepted. This approach
provides flexibility for institutions and
consistent treatment for consumers
regarding “closed” accounts.
Comment 4(a)(l)-2 clarifies that an
institution acquiring accounts through a
merger or acquisition is not required to
provide new account disclosures. The
new institution must comply with
§ 230.5(a)(1) if it chooses to change
terms of the acquired account. Private
transactions are distinguishable,
however, from acquisitions or mergers
involving the Resolution Trust
Corporation (RTC) and the Federal
Deposit Insurance Corporation (FDIC).
In a government-assisted acquisition,
the acquiring institution receives only
the consumer’s funds on deposit. The
deposit contract or other legal
obligation—the terms and conditions of
the account such as fees—stays (and
ultimately terminates) with the failed
institution. Thus, new account
disclosures must be provided if the
consumer chooses to open an account
with the new institution. Also, if fees
are imposed before the new account
relationship is established, the fee must
be disclosed prior to imposition.
(a)(2) Requests
(a)(2)(i)
Comment (a)(2)(i)-l clarifies that
institutions are not required to send
disclosures for accounts no longer
offered to the public.
(a)(2)(ii)(A)
Comment 4(a)(2)(ii)(A)-l has been
added to clarify that when responding
to a request for disclosures by giving
rates “accurate within the most recent
seven calendar days,” institutions
should calculate the time period from
the date the institution sends the
disclosure.




(b) Content of Account Disclosures
(b)(l)(ii) Variable rates
Comments 4(b)(l)(ii)(B)-l and
4(b)(l)(ii)(C)-l, dealing with rate
changes within the institution’s
discretion, have been modified.
Commenters believed rates derived from
formulas based on an institution’s cost
of funds, for example, are not “solely”
in the institution’s discretion. In
response to commenters’ requests, both
comments have been revised for clarity
and consistency.
(b)(2)(ii) Effect of Closing an Account
Comment 4(b)(2)(ii)-l is modified
from the proposal to reflect that state or
other law may affect an institution’s
ability to include in its contract specific
consumer actions considered by the
institution to be a request to close the
account.
(b)(4) Fees
The Board has provided additional
guidance in comment 4(b)(4)-l for fees
imposed for sending to consumers
checks that otherwise would be held by
the institution. Comment 4(b)(4)-2
clarifies that photocopying fees are
incidental fees not required to be
disclosed. An example in comment
4(b)(4)-3 was deleted as unnecessary.
(b)(6) Features of Time Accounts
(b)(6)(ii) Early Withdrawal Penalties
Comment 4(b)(6)(ii)-4 has been added
in response to commenters requesting
guidance for disclosing an early
withdrawal penalty.

Section 230.5—Subsequent Disclosures
(a) Change in Terms
Comment 5(a)(l)-3 provides guidance
on an institution’s responsibility to
provide change-in-term notices when
account disclosures reflect a term that
will change upon the occurrence of an
event. An example relating to student
accounts has been deleted as
unnecessary, and an example about
terms in effect for a limited time has
been added to comment 5(a)(l)-4 in
response to commenters’ requests.
Paragraph (a)(2)(ii) Check Printing Fees
In response to comments received,
comment 5(a)(2)(ii)-l has been
expanded to exclude increases in fees
for printing deposit and withdrawal
slips from change-in-term notice
requirements, although the Board
believes that separate charges for
deposit or withdrawal slips, which are
typically provided along with checks,
are seldom imposed. Many commenters
stated that, like check printing fees, fees

40219

for printing deposit and withdrawal
slips are not within the institution’s
control, since the consumer determines
the quantity ordered.
(b) Notice Before Maturity for Time
Accounts Longer than One Month that
Renew Automatically
Comment 5(b)-2 provides guidance for
disclosing the date when consumers can
ascertain applicable rates for a renewing
CD. The proposed comment required
institutions to indicate when the rate
will be available if the date falls on a
nonbusiness day. Based on comments
received and upon further analysis, the
comment has been modified to delete
the requirement.

Section 230.6—Periodic Statement
Disclosures
(a) General Rule
Comment 6(a)-1 clarifies that if zero
interest is earned during the period,
institutions may disclose $0 for interest
earned (and the annual percentage yield
earned) or omit the disclosure, at their
option.
(a)(2) Amount of Interest
Comment 6{a)(2)-2 clarifies that
institutions may use a variety of terms
to disclose interest earned, and that the
regulation does not mandate use of the
examples.

Section 230.7—Payment of Interest
(a)(1) Permissible Methods
Comment 7(a)(l)-l has been expanded
to reflect the act’s legislative history,
which cites the “low balance” method
as an example of a prohibited interest
calculation method.
Proposed comment 7(a)(l)-6
addressed “dormant” accounts, and the
Board solicited comment on whether an
institution should be permitted to
withhold the payment of interest for
dormant accounts. Proposed comment
7(b)-4 raised a similar issue for dormant
accounts. Many comments were
received. Some commenters believed
institutions should be permitted to
withhold the payment of interest for
dormant accounts, if authorized by state
or other law and the deposit contract.
Other commenters noted that what
constitutes a “dormant” account varies
widely among the states and
institutions. These commenters
expressed concern about the impact of
the rule if any period of inactivity—
however brief—could transform an
account to dormant status. Still others
raised concerns whether the act, which
requires that interest be paid on the full
amount of principal in the account each
day, permitted such an interpretation.

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Federal Register / Vol. 59, No. 151 / Monday, August 8, 1994 / Rules and Regulations

(12 ILS.C. 4306(a).} Based on the
comments received and further analysis,
the Board believes that account
inactivity does not affect an institution’s
duty to pay interest. (See comment 7(c)3, which provides that institutions must
accrue interest on funds until the funds
are withdrawn from the account.) The
Board believes this position— reflected
in comment 7(a)(l}-6— is consistent
with the purposes of the act and the rule
that interest must be calculated for
funds in accounts meeting minimum
balance requirements for as long as
funds remain in the account.
(a) (2) Determination of Minimum
Balance to Earn Interest
Comment 7(a)(2)-6 clarifies
limitations on minimum balance
requirements to earn interest for club
accounts— such as “holiday” or
“vacation” club. The rule does not
apply to a club account's minimum
balance requirements for earning
bonuses.

(b) Compounding and Crediting Policies
Comment 7(b)-3 has been revised to
clarify that the circumstances under
which an institution may deem an
account closed, and whether accrued
but uncredited interest may be deemed
forfeited, is subject to state or other law,
if any (and to any limitations therein).
Comment 7(b}-4, dealing with the
forfeiture of accrued but uncredited
interest for dormant accounts, has been
withdrawn for the reasons discussed in
comment (a)(l}-6 above.

Section 230.8—A d vertisin g
(a) Misleading or Inaccurate
Advertisements
Comment 8(a}-2 would have required
institutions using indoor signs
advertising APYs for tiered-rate
accounts to state both the lower and
higher dollar amount for the tier
corresponding to the advertised APY.
Many comm enters believed stating both
dollar amounts is unnecessary. The
Board concurs. Thus, the comment
provides that a sign is not misleading or
inaccurate if it states the lower dollar
amount of the tier corresponding to the
advertised annual percentage yield.
Institutions cannot advertise accounts
as "free” or “no cost” (or terms of
similar meaning) if maintenance and
activity fees can be imposed. Comments
8(a)-3 and 8(a)-4 address the scope of
“maintenance and activity” fees and
addresses advertisements for "free”
accounts with optional electronic
services. Commenters were divided on
whether fees for electronic services such
as A I'M access should preclude




institutions from advertising accounts as
free. Based on the comments received
and further analysis, the Board believes
that A T M services are not different from
other optional services such as home
banking.
The Board believes that because A T M
access is provided only upon a
consumer’s request and consumers
receive information— including the cost
of A T M access— before obtaining the
service, the imposition of fees for ATM
access (including annual fees) does not
preclude institutions from advertising
accounts as free or no-cost.
The Board received numerous
comments on its proposal to consider
the term “fees waived” as similar to the
terms “free” or “no cost.” Many
commenters opposed the proposed
comment. They stated that the term
“fees waived” necessarily implies the
existence o f charges, and thus is
distinguishable from the terms “free” or
“no cost.” These commenters believed
consumers would be unnecessarily
disadvantaged if advertising fee waivers
were restricted as proposed. Others
believed most consumers would not
distinguish between the terms and that
advertising accounts with “waived fees”
raised the concerns the Congress had in
mind when prohibiting the
advertisement of accounts as free or nocost or "words of similar meaning.” The
Board believes that “ fees waived” is a
term similar to “free” or “no cost;” thus,
the commentary (now 8(a)-5) has been
retained as proposed.
Comment 8(a)-6 has been modified for
clarity.
(b) Permissible Rates
Comment 8(b)-3 provides guidance on
advertising accounts for which
institutions offer a number of versions
(CDs, for example). The Board has
revised the comment for clarity without
any intended change in meaning.
(c) When Additional Disclosures Are
Required
The regulation requires institutions to
disclose additional information when
the A PY is advertised. Comment 8(c)-l
provides examples of account
descriptions that do not trigger the
additional disclosures.
The Board has eliminated the
reference to a bonus of 1% over an
institution’s current rate for one-year
certificates of deposit as an example of
a trigger term. Based on comments
received and upon further analysis, the
Board believes a reference to an
institution’s own rates (to which a
“bonus” rate or margin will be applied}
is not a trigger term if those rates are not
readily determinable from the

advertisement itself. This position is
consistent with the rules regarding
trigger terms in advertisements under
the Board's Regulation Z (12 CFR part
226).
(c)(2) Time Annual Percentage Yield Is
Offered
Comment 8(c)(2)-2 has been added in
response to commenters’ requests. It
specifies that an advertisement may
refer to the A P Y as being accurate as of
the date of publication, if the date is on
the publication itself.

A p p e n d ix A —A n n u a l P ercentage Y ield
C alcu lation
Part II. Annual Percentage Yield Earned
for Periodic Statements
Comment app. A.1J.A.-1 provides
guidance about the treatment of accrued
but uncredited interest in the balances
used to calculate the APYE. The Board
believes an inaccurate APYE would
result if institutions include accrued
interest in the balance figure when
statements are sent less frequently than
interest is credited. But when periodic
statements are issued more frequently
than interest is credited, accrued
interest must be included in the balance
figure for APYE computation purposes.
B. Special Formula for Use Where
Periodic Statements Are Sent More
Often Than the Period for Which
Interest Is Compounded
Comment app. A.U.B.-l has been
adopted as proposed- Institutions may
use the special formula to calculate an
APYE on a quarterly statement whether
or not a monthly statement is triggered
by Regulation E during the quarter.
Commenters supported this rule as
significantly reducing compliance
burdens for institutions.
Comment app. A.II.B.-2 clarifies that
the special formula requires institutions
to use the actual number of days in the
compounding period in calculating the
APYE. The Board believes using the
actual number of days in a
compounding period is necessary to
produce an accurate APYE for a specific
consumer’s account.

A p p e n d ix B —M o d el Clauses a n d

Sample Forms
Proposed comments app. B-6, B-4-1
and B -9 -1 have been deleted as
unnecessary.
List of Subjects in 12 CFR Part 230
Advertising, Banks, banking,
Consumer protection, Federal Reserve
System, Reporting and recordkeeping
requirements, Truth in savings.

Federal Register / Vol. 59, No. 151 / Monday, August 8, 1994 / Rules and Regulations
For the reasons set forth in the
preamble, the Board amends 12 CFR
part 230 as follows:

i i i . T r u st a c c o u n ts o p e n e d b y a tr u ste e
p u r su a n t to a form al w r itte n tru st
a g reem en t (n o t m e r e ly d e c la r a tio n s o f
tru st o n a sig n a tu r e ca rd s u c h a s a
‘T o t t e n tru st,” or a n IR A a n d SEP
a c c o u n t)
iv . A c c o u n ts o p e n e d b y a n e x e c u t o r in th e
n a m e o f a d e c e d e n t ’s e s ta te

i. M o rtgage e s c r o w a c c o u n ts for c o lle c t in g
taxes a n d p ro p erty in s u r a n c e p r e m iu m s
ii. A c c o u n t s e s ta b lis h e d t o m a k e p e r io d ic
disbursements o n c o n s tr u c tio n lo a n s

i. D isa b ility in su r a n c e p r e m iu m s v a lu e d at an
a m o u n t o f S 1 0 or le s s p e r y e a r
ii. C o ffe e m u g s , T -sh ir ts o r o th e r m e r c h a n d is e
w ith a m ark et v a lu e o f 5 1 0 or le s s

40221

3 . A ggregation . In d e te r m in in g i f a n ite m
v a lu e d at $ 1 0 or le s s i s a b o n u s , in s t itu t io n s
m u s t aggregate p e r a c c o u n t p e r c a le n d a r y e a r
ite m s that m a y b e g iv e n t o c o n s u m e r s . In
m a k in g t h is d e te r m in a tio n , in s t itu t io n s
PART 230—TROTH IN SAVINGS
a g gregate p e r a c c o u n t o n ly t h e m ark et v a lu e
(REGULATION DD)
o f ite m s th at m a y b e g iv e n fo r a s p e c if ic
p r o m o tio n . T o illu s tr a te , a s s u m e a n
1. The authority citation for part 230
3.
O th er in vestm en ts. T h e term “ a c c o u n t” in s titu tio n offer s in Jan u ary to g iv e
continues to read as follows:
c o n s u m e r s a n ite m v a lu e d at $ 7 few e a c h
d o e s n o t a p p ly to a ll p r o d u c ts o f a d e p o sito r y
c a le n d a r qu arter d u r in g t h e y e a r th at th e
A u th o r ity : 1 2 U .S .C . 4 3 0 1 , e t seq .
in stitu tio n . E x a m p le s o f p r o d u c ts n o t c o v e r e d
a v e ra g e a c c o u n t b a la n c e in a n e g o tia b le o rd er
are:
2. Part 2 3 0 is amended by adding a
o f w ith d r a w a l (N O W ) a c c o u n t e x c e e d s
i. G o v e r n m e n t s e c u r itie s
$ 1 0 ,0 0 0 . T h e b o n u s r u le s a re trig g ered , s in c e
new Supplement I at the end of the
ii. M u tu a l fu n d s
c o n su m e r s are e lig ib le u n d e r th e p r o m o tio n
appendices to the Part to read as
iii. A n n u itie s
to r e c e iv e u p to $ 2 8 d u r in g th e y ea r.
follows:
iv. S e c u r itie s or o b lig a tio n s o f a d e p o s ito r y
H o w e v e r , th e b o n u s r u le s a re n o t triggered i f
in s titu tio n
an ite m v a lu e d at $7 i s o ffe r e d to c o n s u m e r s
Supplement I to Part 230—Official Staff v. C o n tra ctu al arran gem en ts su c h as
o p e n in g a N O W a c c o u n t d u r in g th e m o n th o f
Interpretations
r e p u r c h a se a g r e e m e n ts, in te r e st rate
January, e v e n th o u g h in N o v e m b e r th e
s w a p s , a n d b a n k ers a c c e p ta n c e s
in s titu tio n in tr o d u c e s a n e w p r o m o tio n th a t
Introduction
(b) Advertisement
in c lu d e s , for e x a m p le , a n o ffer t o e x is t in g
1. Covered messages. A d v e r tis e m e n ts
1.
Official status. T h is c o m m e n ta r y is th e
N O W a c c o u n t h o ld e r s for an ite m v a lu e d at
in c lu d e c o m m e r c ia l m e s s a g e s in v is u a l, o r a l,
m e a n s b y w h ic h th e D iv is io n o f C o n su m e r
$ 8 for m a in ta in in g a n a v er a g e b a la n c e o f
o r p r in t m e d ia th at in v ite , o ffe r , o r o th e r w is e
a n d C o m m u n ity A ffa irs o f t h e F ed era l
$ 5 ,0 0 0 for th e m o n th .
a n n o u n c e g e n e r a lly t o p r o s p e c tiv e c u s to m e r s
R e s e r v e B oard is s u e s o ffic ia l sta ff
4 . W a iver o r re d u c tio n o f a f e e o r
th e a v a ila b ility o f c o n s u m e r a c c o u n t s — s u c h
in te r p r e ta tio n s o f R e g u la tio n D D . G o o d faith
a b so rp tio n o f ex p en ses. B o n u s e s d o n o t
as:
c o m p lia n c e w it h t h is c o m m e n ta r y a ffo rd s
in c lu d e v a lu e that c o n s u m e r s r e c e iv e th rou gh
i. T e le p h o n e s o lic ita tio n s
p r o te c tio n from lia b ility u n d e r s e c tio n 2 7 1 (f)
th e w a iv e r or r e d u c tio n o f fe e s ( e v e n i f th e
ii. M e s sa g e s o n a u to m a te d t e lle r m a c h in e
o f th e T r u th in S a v in g s A c t.
fe e s w a iv e d e x c e e d $ 1 0 ) for b a n k in g -r e la te d
(A T M ) sc r e e n s
S e c tio n 2 3 0 .1 — A u th o r ity , p u r p o s e ,
s e r v ic e s su c h as th e f o llo w in g :
iii. M e s s a g e s o n a c o m p u te r s c r e e n in an
c o v e r a g e , a n d e ffe c t o n sta te la w s.
i. A sa fe d e p o s it b o x r en ta l fe e for c o n s u m e r s
in s titu tio n 's lo b b y ( in c lu d in g a n y
(c) Coverage
w h o op en a n ew account
p r in to u t) o th e r th a n a s c r e e n v ie w e d
1. Foreign applicability. R e g u la tio n D D
ii. F e e s for tr a v e le r s c h e c k s for a c c o u n t
s o le ly b y t h e in s t itu t io n ’s e m p lo y e e
a p p lie s to a ll d e p o s ito r y in s t itu t io n s , e x c e p t
h o ld e r s
iv . M e s sa g e s in a n e w s p a p e r , m a g a z in e , o r
c r e d it u n io n s , that o ffe r d e p o s it a c c o u n ts to
iii. D is c o u n t s o n in te r e st r a te s c h a r g e d for
p r o m o tio n a l fly e r or o n r a d io
r e s id e n ts ( in c lu d in g r e s id e n t a lie n s ) o f a n y
lo a n s at th e in s titu tio n
v. M e s sa g e s th at are p r o v id e d a lo n g w ith
sta te as d e fin e d in § 2 3 0 .2 (r). A c c o u n t s h e ld
(h) Consumer
in fo r m a tio n ab o u t t h e c o n s u m e r 's
in a n in s titu tio n lo c a te d in a sta te are
1. Professional capacity. E x a m p le s o f
e x is tin g a c c o u n t a n d that p r o m o te
c o v e r e d , e v e n i f fu n d s a re tra n sferred
a c c o u n ts h e ld b y a n a tu ra l p e r s o n in a
a n o th e r a c c o u n t at t h e in s titu tio n
p e r io d ic a lly to a lo c a tio n o u ts id e th e U n ite d
p r o fe ss io n a l c a p a c ity fo r a n o th e r a re
2. Other messages. Examples o f messages
S ta tes. A c c o u n ts h e ld in a n in s titu tio n
a tto r n e y -c lie n t tru st a c c o u n t s a n d la n d lo r d that are n o t a d v e r tise m e n ts are:
lo c a te d o u ts id e th e U n ite d S ta te s are n o t
te n a n t s e c u r ity a c c o u n ts .
c o v e r e d , e v e n i f h e ld b y a U .S . r e s id e n t.
i. R ate s h e e ts in a n e w s p a p e r , p e r io d ic a l, or
2. O th er a cco u n ts. A c c o u n t s n o t h e ld in a
tra d e jou rn al (u n le s s th e d e p o s ito r y
2. Persons who advertise accounts. P e r so n s
p r o fe ss io n a l c a p a c ity in c lu d e a c c o u n t s h e ld
in s titu tio n , o r a d e p o s it b rok er o ffe r in g
w h o a d v e r tise a c c o u n ts are su b je c t to th e
b y an in d iv id u a l for a c h ild undeT t h e
a c c o u n ts at th e in s t itu t io n , p a y s a fe e for
a d v e r tisin g ru le s. F or e x a m p le , i f a d e p o s it
U n ifo r m G ifts to M in o r s A c t.
or o th e r w is e c o n tr o ls p u b lic a tio n )
b ro k er p la c e s an a d v e r tise m e n t o ffe r in g
3. Sole proprietors. A c c o u n t s h e ld b y
ii. In -p e r so n d is c u s s io n s w it h c o n s u m e r s
c o n su m e r s an in te r e st in an a c c o u n t at a
in d iv id u a ls a s s o le p ro p r ie to r s are n o t
a b o u t th e term s for a s p e c if ic a c c o u n t
covered.
d e p o s ito r y in s titu tio n , th e a d v e r tis in g ru les
iii. In fo r m a tio n g iv e n to c o n s u m e r s a b o u t
4. Retirement plans. IR A s a n d SE P
a p p ly to th e a d v e r tise m e n t, w h e th e r th e
e x is t in g a c c o u n ts , s u c h a s cu rren t rates
a c c o u n ts are c o n s u m e r a c c o u n ts t o th e e x te n t
a c c o u n t is to b e h e ld b y th e b ro k er or directly
r e c o r d e d o n a v o ic e r e s p o n s e m a c h in e or
that fu n d s are in v e s t e d in c o v e r e d a c c o u n ts .
b y t h e c o n su m e r .
n o tic e s for a u to m a tic a lly r e n e w a b le tim e
B ut K eogh a c c o u n ts a r e n o t su b je c t to th e
S e c tio n 2 3 0 .2 — D e fin itio n s .
a c c o u n ts se n t b e fo re r e n e w a l
reg u la tio n .
(a) Account
5. Unincorporated associations. A n
1. Covered accounts. E x a m p le s o f a c c o u n ts
(f) Bonus
in s titu tio n m a y r e ly o n th e d e c la r a tio n o f th e
su b ject to th e r e g u la tio n are:
1. Examples. B o n u s e s in c lu d e ite m s o f
p e r s o n r e p r e s e n tin g a n u n in c o r p o r a te d
i. In terest-b ea rin g a n d n o n in te r e st-b e a r in g
v a lu e , o th e r th an in te r e st, o ffe r e d as
a s s o c ia tio n a s to w h e th e r th e a c c o u n t is h e ld
accounts
in c e n t iv e s to c o n s u m e r s , s u c h a s an offer to
for a b u s in e s s or n o n b u s in e s s p u r p o se .
ii. Deposit a c c o u n ts opened a s a condition of p a y th e fin a l in s ta llm e n t d e p o s it for a
(j) Depository institution and institution
obtaining a c r e d it ca rd
h o lid a y c lu b a c c o u n t. Item s th at are n o t a
1.
Foreign institutions. B r a n c h e s o f fo reig n
iii. Accounts denominated in a foreign
b o n u s in c lu d e d is c o u n t c o u p o n s for g o o d s o r
in s titu tio n s lo c a te d in th e U n ite d S ta te s are
cu r r e n c y
s e r v ic e s at restau ran ts or sto r e s .
su b je c t to th e r e g u la tio n i f th e y o ffe r d e p o s it
iv . In d iv id u a l r e tirem en t a c c o u n t s (IR A s) a n d
2. De minimis rule. Item s w it h a de
a c c o u n ts t o c o n s u m e r s . E d g e A c t a n d
simplified employee pension (SEP)
minimis v a lu e o f $ 1 0 o r le s s are n o t b o n u s e s . A g r e e m e n t c o r p o r a tio n s, a n d a g e n c ie s o f
accounts
I n s titu tio n s m a y r e ly o n th e v a lu a tio n
fo reig n in s titu tio n s , are n o t d e p o s it o r y
v. Payable on death (POD) or 'Totten trust”
sta n d a r d u s e d b y th e In tern al R e v e n u e
in s titu tio n s for p u r p o s e s o f t h is r e g u la tio n .
a c c o u n ts
S e r v ic e t o d e te r m in e i f th e v a lu e o f t h e ite m
(k) Deposit broker
2. Other accounts. Examples of accounts
is de minimis. E x a m p le s o f ite m s o f de
1.
General. A d e p o s it b rok er i s a p e r s o n
not subject to the regulation are:
minimis v a lu e are:
w h o is in t h e b u s in e s s o f p la c in g or




fa c ilita tin g th e p la c e m e n t o f d e p o s it s in an
in s titu tio n , as d e fin e d b y th e F e d e r a l D e p o s it
In su r a n c e A c t (1 2 U .S .C . 29(g )).

(n) Interest

/o7a<}
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Federal Register / Vol. 59. No. 151 / Monday, August 8, 1994 / Rules and Regulations

1.
R elation to R egulation Q. W h ile b o n u s e siii. In c o m b in a tio n w it h d is c lo s u r e s for o th e r
are n o t in te r e st for p u r p o se s o f th is
ty p e s o f a c c o u n ts , as lo n g a s it is c le a r
reg u la tio n , o th e r r e g u la tio n s m a y treat th e m
to c o n s u m e r s w h ic h d is c lo s u r e s a p p ly to
as th e e q u iv a le n t o f in te r e st. For e x a m p le .
th e ir a c c o u n t
R e g u la tio n Q id e n tif ie s p a y m e n ts o f ca s h or
iv . O n m o re th a n o n e p a g e an d o n th e front
m e r c h a n d ise tha t v io la te th e p r o h ib itio n
a n d re v e r se s id e s
a gain st p a y in g in te r e st o n d e m a n d a c c o u n ts.
v . B y u s in g in se r ts to a d o c u m e n t or fillin g
(S e e 12 CFR § 2 1 7 .2 (d ).)
in b la n k s
(p) P assb o o k sa vin g s a ccou n t
v i. O n m o re than o n e d o c u m e n t, a s lo n g a s
1.
R elation to R egulation E. P a ssb o o k
th e d o c u m e n ts are p r o v id e d at th e sa m e
sa v in g s a c c o u n ts in c lu d e a c c o u n ts a c c e s s e d
tim e
b y p r e a u th o r iz e d e le c tr o n ic fu n d tra n sfers to
2.
C on sisten t term in ology. In s titu tio n s
th e a c c o u n t (as d e fin e d in 12 CFR § 205.2(j))>
m u s t u s e c o n s is te n t te r m in o lo g y to d e sc r ib e
su c h as a n a c c o u n t tha t r e c e iv e s d ir e c t
term s o r fea tu re s r e q u ir e d to b e d is c lo s e d .
d e p o s it o f so c ia l se c u r ity p a y m e n ts.
F or e x a m p le , if a n in s titu tio n d e sc r ib e s a
A c c o u n ts p e r m ittin g a c c e s s b y o th e r
m o n th ly fee (r e g a rd less o f a c c o u n t a c tiv ity )
e le c tr o n ic m e a n s are n o t “ p a ss b o o k sa v in g
as a “ m o n th ly s e r v ic e f e e ” in a c c o u n t­
a c c o u n ts ” a n d m u s t c o m p ly w it h th e
o p e n in g d is c lo s u r e s , th e p e r io d ic sta te m e n t
req u irem en ts o f § 2 3 0 .6 i f s ta te m e n ts are s e n t
a n d c h a n g e -in -te r m n o tic e s m u s t u s e th e
fou r or m o re tim e s a year.
sa m e te r m in o lo g y s o that c o n s u m e r s can

(q) P erio d ic sta te m e n t
1.
E xam ples. P e r io d ic s ta te m e n ts d o n o t
in c lu d e :
i. A d d itio n a l sta te m e n ts p r o v id e d s o le ly
u p o n r eq u est
ii. In fo rm a tio n p r o v id e d b y c o m p u te r
th r o u g h h o m e b a n k in g s e r v ic e s
iii. G en eral s e r v ic e in fo r m a tio n s u c h a s a
q u a rterly n e w s le tte r or o th e r
c o r r e s p o n d e n c e d e sc r ib in g a v a ila b le
s e r v ic e s a n d p r o d u c ts

(t) T iered-rate a cco u n t
1. T im e a cco u n ts. T im e a c c o u n ts p a y in g
d ifferen t rates b a se d s o le ly o n th e a m o u n t o f
th e in itia l d e p o s it are n o t tiered -r a te
a c c o u n ts.
2. M in im u m b a la n ce.requ irem en ts. A
r e q u irem en t to m a in ta in a m in im u m b a la n c e
to earn in te r e st d o e s n o t m a k e a n a c c o u n t a
tiered -ra te a c c o u n t.

(u) T im e a cco u n t
1. C lub a cco u n ts. A lth o u g h c lu b a c c o u n ts
ty p ic a lly h a v e a m a tu rity d a te , th e y are n o t
tim e a c c o u n ts u n le s s th e y a ls o req u ire a
p e n a lty o f at le a s t s e v e n d a y s ’ in te r e st for
w ith d r a w a ls d u r in g th e first s ix d a y s after th e
a c c o u n t is o p e n e d .
2. R elation to R egulation D. R e g u la tio n D
p e r m its in lim ite d c ir c u m s ta n c e s th e
w ith d r a w a l o f fu n d s w ith o u t p e n a lty d u r in g
th e first s ix d a y s a fter a “ tim e d e p o s it ” is
o p e n e d . (S e e 12 C FR § 2 0 4 .2 ( c ) ( l) ( i) .) B ut th e
fact that a c o n s u m e r m a k e s a w ith d r a w a l as
p e rm itted b y R e g u la tio n D d o e s n o t
d is q u a lify th e a c c o u n t fro m b e in g a tim e
a c c o u n t for p u r p o se s o f th is re g u la tio n .

(v)

V ariable-rate a cco u n t

1.
General. A c e r tific a te o f d e p o s it
p e r m ittin g o n e o r m o r e rate a d ju stm e n ts p rior
to m atu rity at th e c o n s u m e r ’s o p tio n is a
variab le-rate a c c o u n t.

Section 230,3 General disclosure
requirements.
(a) Form
1. D esign requ irem en ts. D is c lo s u r e s m u st
be p r e se n te d in a form at th a t a llo w s
c o n su m e r s to r e a d ily u n d e r sta n d th e term s o f
th eir a c c o u n t. I n s titu tio n s are n o t req u ired to
u se a p a rticu la r ty p e s iz e or ty p e fa c e , n o r are
in stitu tio n s re q u ir e d to sta te a n y term m o re
c o n s p ic u o u s ly th a n a n y o th e r term .
D isc lo su r e s m a y b e m ade:
i. In a n y o rd er
ii. In c o m b in a tio n w ith o th e r d is c lo s u r e s or
a c c o u n t term s




r e a d ily id e n tify th e fee.

(b) G eneral
1. S p e c ific ity o f leg a l obligation.
In s titu tio n s m a y refer to th e c a le n d a r m o n th
o r to r o u g h ly e q u iv a le n t in te r v a ls d u r in g a
c a le n d a r y ea r a s a “ m o n t h .”

(c) R elation to R egulation E
1. G eneral rule. C o m p lia n c e w ith
R e g u la tio n E (12 C FR part 2 0 5 ) is d e e m e d to
s a tisfy th e d is c lo s u r e r e q u ir e m e n ts o f th is
r e g u la tio n , s u c h a s w h e n :
i. A n in s titu tio n c h a n g e s a term that triggers
a n o tic e u n d e r R e g u la tio n E, a n d u s e s th e
tim in g a n d d is c lo s u r e r u le s o f R e g u la tio n
E for s e n d in g c h a n g e -in -te r m n o tic e s
ii. C o n su m e r s a d d an A T M a c c e s s featu re to
a n a c c o u n t, a n d th e in s titu tio n p r o v id e s
d is c lo s u r e s p u r su a n t to R e g u la tio n E.
in c lu d in g d is c lo s u r e o f fe e s (S e e 12 CFR
§ 2 0 5 .7 .)
iii. A n in s titu tio n c o m p ly in g w ith th e tim in g
r u le s o f R e g u la tio n E d is c lo s e s at th e
sa m e tim e fe e s for e le c tr o n ic se r v ic e s
(su c h a s for b a la n c e in q u ir y fe e s at
A T M s) req u ired to b e d is c lo s e d b y th is
r e g u la tio n b u t n o t b y R e g u la tio n E
iv . A n in s titu tio n r e lie s o n R e g u la tio n E's
r u le s regard in g d is c lo s u r e o f lim ita tio n s
o n th e fr e q u e n c y a n d a m o u n t o f
e le c tr o n ic fu n d tran sfers, in c lu d in g
se c u r ity -r e la te d e x c e p tio n s . B u t a n y
lim ita tio n s o n “ in tr a -in stitu tio n a l
tra n sfers" to or from th e c o n s u m e r ’s
o th e r a c c o u n ts d u r in g a g iv e n tim e
p e r io d m u s t b e d is c lo s e d , e v e n th o u g h
in tr a -in stitu tio n a l tran sfers are e x e m p t
fro m R e g u la tio n E.

(e) O ral re sp o n se to in qu iries
1. A p p lic a tio n o f rule. In s titu tio n s are n ot
req u ired to p r o v id e rate in fo r m a tio n ora lly .
2. R elation to advertisin g. T h e a d v e r tisin g
r u le s d o n o t c o v e r an oral r e s p o n s e to a
q u e s tio n a b o u t rates.
3. E xisting accou n ts. T h is paragraph d o e s
n o t a p p ly to oral r e s p o n s e s ab ou t rate
in fo r m a tio n for e x is tin g a c c o u n ts. For
e x a m p le , if a c o n s u m e r h o ld in g a o n e -y e a r
c e r tific a te o f d e p o s it (CD) r e q u e sts in te rest
rate in fo r m a tio n a b o u t th e CD d u r in g th e
term , th e in s titu tio n n e e d n o t d is c lo s e the
a n n u a l p er c e n ta g e y ie ld .

(f) R ou n din g a n d a cc u ra c y ru les for rates
a n d y ie ld s
(f)(1) R ou n din g
1. Permissible rounding. E x a m p le s o f
p e r m iss ib le r o u n d in g are an a n n u a l

p e r c e n ta g e y ie ld c a lc u la te d to b e 5 .6 4 4 % ,
r o u n d e d d o w n a n d d is c lo s e d a s 5.64% :
5 .6 4 5 % r o u n d e d u p a n d d is c lo s e d a s 5.6 5 % .

(f)(2) A c cu ra cy
1. A n n u a l p ercen ta g e y ie ld a n d an n u al
p ercen ta g e y ie ld earn ed. T h e to le r a n c e for
a n n u a l p e r c e n ta g e y ie ld a n d a n n u a l
p er c e n ta g e y ie ld e a r n e d c a lc u la tio n s is
d e s ig n e d to a c c o m m o d a te in a d v e r te n t errors.
In s titu tio n s m a y n o t p u r p o s e ly in co r p o r a te
th e to le r a n c e in to th e ir c a lc u la tio n o f y ie ld s .

Section 230.4

Account disclosures.

(a) D elivery o f a cco u n t d isclo su res
(a)(1) A c c o u n t op en in g
1. iV ew a cco u n ts. New account disclosures

must be provided when:
i. A tim e a c c o u n t th at d o e s n o t a u to m a tic a lly
r o llo v e r is r e n e w e d b y a c o n su m e r
ii. A c o n s u m e r c h a n g e s a term for a
r e n e w a b le tim e a c c o u n t (se e § 2 3 0 .5 ( b ) 5 regard in g d is c lo s u r e a lte r n a tiv e s)
iii. A n in s titu tio n tran sfers fu n d s from an
a c c o u n t to o p e n a n e w a c c o u n t n o t at th e
c o n s u m e r ’s r e q u e st, u n le s s th e
in s titu tio n p r e v io u s ly g a v e a c c o u n t
d is c lo s u r e s a n d a n y ch a n g e -in -te r m
n o tic e s for th e n e w a c c o u n t
iv . A n in s titu tio n a c c e p ts a d e p o s it from a
c o n s u m e r to a n a c c o u n t that th e
in s titu tio n h a d d e e m e d c lo s e d for th e
p u r p o se o f tr ea tin g a c c r u e d b u t
u n c r e d ite d in te r e st a s fo rfe ited in te rest
(se e § 2 3 0 .7 (b )—
3)
2. A c q u ire d a cco u n ts. N e w a c c o u n t
d is c lo s u r e s n e e d n o t b e g iv e n w h e n an
in s titu tio n a c q u ir e s a n a c c o u n t th r ou gh an
a c q u is itio n o f o r m erg er w ith a n o th e r
in s titu tio n (bu t s e e § 2 3 0 .5 (a ) regard in g
a d v a n c e n o tic e r e q u ir e m e n ts if term s are
ch a n g e d ).

(a)(2) R equ ests
(a)(2)(i)
1. In qu iries versu s requ ests. A response to
an oral in q u ir y (b y te le p h o n e or in p erso n )
ab o u t rates a n d y ie ld s or fe e s d o e s n o t trigger
th e d u ty to p r o v id e a c c o u n t d is c lo s u r e s . B ut
w h e n c o n s u m e r s a sk for w r itte n in fo r m a tio n
ab o u t a n a c c o u n t (w h e th e r b y te le p h o n e , in
p e r so n , or b y o th e r m e a n s), th e in stitu tio n
m u s t p r o v id e d is c lo s u r e s u n le s s th e a c c o u n t
is n o lo n g e r o ffe r e d to th e p u b lic .
2. Genera) req u ests. W h e n r e s p o n d in g to a
c o n su m e r 's g e n e r a l re q u e st for d is c lo s u r e s
ab ou t a ty p e o f a c c o u n t (a N O W a c c o u n t, for
e x a m p le ), a n in s titu tio n that o ffe r s se v e r a l
v a r ia tio n s m a y p r o v id e d is c lo s u r e s for a n y
o n e o f th em .
3. T im in g fo r resp o n se . T e n b u s in e s s d a y s
is a r e a so n a b le tim e for r e s p o n d in g to
r e q u e sts for a c c o u n t in fo r m a tio n that
c o n su m e r s d o n o t m a k e in p e r so n .

(a)(2)(ii)(A )
1. R ecen t rates.

Institutions comply with
this paragraph if they disclose an interest rate
and annual percentage yield accurate within
the seven calendar days preceding the date
they send the disclosures.
(a)

(2)(ii)(B)

1. Term . D e sc r ib in g th e m a tu rity o f a tim e
a c c o u n t as “ 1 y e a r ” or “ 6 m o n th s," for
e x a m p le , illu str a te s a sta te m e n t o f th e
m a tu rity o f a tim e a c c o u n t as a term rather
than a d a te (“ January 1 0 , 1 9 9 5 ” ).

(b) C on ten t o f a cco u n t d isc lo su res
( b ) ( l ) R ate in form ation

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(b )(l)(i) A n n u a l p ercen ta g e y ie ld a n d
in terest rate
1. R ate disclosu res. 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.
2. F ixed-rate acco u n ts. F or fix ed -ra te tim e
a c c o u n ts p a y in g th e o p e n in g rate u n til
m a tu rity , in stitu tio n s m a y d is c lo s e th e p e r io d
o f tim e th e in te rest rate w i l l b e in e ffe c t b y
sta tin g th e m a tu rity d a te . (S e e A p p e n d ix B ,
B - 7 — S a m p le F orm .) F or o th e r fix ed -ra te
a c c o u n ts, in s titu tio n s m a y u s e a d a te (“ T h is
rate w i l l b e in e ffe ct th r o u g h M ay 4 , 1 9 9 5 ” )
or a p e r io d (“ T h is rate w ill b e in e ffe c t for
at le a st 3 0 d a y s ” ).
3. T iered-rate accou n ts. Each interest rate,

along with the corresponding annual
percentage yield for each specified balance
level (or range of annual percentage yields,
if appropriate), must be disclosed for tieredrate accounts. (See Appendix A, Part I,
Paragraph D.)
4. S tep p ed -ra te accou n ts. A s in g le
c o m p o s ite a n n u a l p er c e n ta g e y ie ld m u s t b e
d is c lo s e d for ste p p e d -r a te a c c o u n ts. (S e e
A p p e n d ix A , Part I, P aragraph B .) T h e
in te r e st rates a n d th e p e r io d o f tim e e a c h w ill
b e in e ffe ct a lso m u s t b e p r o v id e d . W h e n th e
in itia l rate o ffered for a s p e c ifie d tim e o n a
varia b le-ra te a c c o u n t is h ig h e r or lo w e r th a n
th e rate that w o u ld o th e r w is e b e p a id o n th e
a c c o u n t, th e c a lc u la tio n o f th e a n n u a l
p e r c e n ta g e y ie ld m u s t b e m a d e as if for a
step p e d -r a te a c c o u n t. (S e e A p p e n d ix A , Part
I, P aragraph C.)

(b)(1)(H) Variable ra tes
(b)(l)(ii)(B )
1.
D eterm ining in terest rates.

To disclose
how the interest rate is determined,
institutions must:
i. Id e n tify th e in d e x ,a n d s p e c ific m a rg in , if
th e in te rest rate is tie d to an in d e x

ii. State that rate changes are within the
in s titu tio n ’s d is c r e tio n , i f th e in stitu tio n
d o e s n o t tie c h a n g e s to an in d e x

(b)(l)(ii)(C )
1.
F requ en cy o f ra te changes. A n
in stitu tio n r e se r v in g th e rig h t to c h a n g e rates
at its d isc r e tio n m u s t sta te th e fact that rates
m a y ch a n g e at a n y tim e .

(b)(l)(ii)(D)

floor or ceiling on rates
or on the amount the rate may decrease or
increase during any time period must be
disclosed. Institutions need not disclose the
absence of limitations on rate changes.
1.

L im itation s. A

(b)(2) C o m pou n din g a n d creditin g
(b)(2)(H) Effect o f closin g an accou n t
1.
D eem in g an a cco u n t clo sed . 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.
(b)(3) B alan ce in form ation
(b)(3)(H) B alan ce c o m p u ta tio n m e th o d
1.
M eth o d s a n d p erio d s. Institutions

may
use different methods or periods to calculate




m in im u m b a la n c e s for p u r p o s e s o f im p o s in g
a fe e (th e d a ily b a la n c e for a c a le n d a r m o n th ,
for e x a m p le ) a n d a c c r u in g in te r e st (th e
a v era g e d a ily b a la n c e for a sta te m e n t p e r io d ,
for e x a m p le ). E ach m e th o d a n d
c o r r e sp o n d in g p e r io d m u s t b e d is c lo s e d .

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1.
"C allable ” tim e a cco u n ts. In a d d itio n to
th e m a tu rity d ate , a n in s titu tio n m u s t sta te
th e d a te or th e c ir c u m s ta n c e s u n d e r w h ic h it
m a y r e d e e m a tim e a c c o u n t at th e
in s t itu t io n ’s o p tio n (a “ c a lla b le ” tim e
a c c o u n t).

(b)(6)(H) E arly w ith d ra w a l p e n a ltie s
(b)(3)(iii) When in terest begin s to accru e
1.
A d d itio n a l in form ation . In s titu tio n s m a y 1. General. T h e term “ p e n a lty ” m a y b u t
d is c lo s e a d d itio n a l in fo r m a tio n su c h a s th e
tim e o f d a y after w h ic h d e p o s it s are treated
a s h a v in g b e e n r e c e iv e d th e fo llo w in g
b u s in e s s d a y , a n d m a y u s e a d d itio n a l
d e s c r ip tiv e term s s u c h a s “ le d g e r ” or
“ c o lle c t e d ” b a la n c e s to d is c lo s e w h e n
in te r e st b e g in s to a ccru e.

n e e d n o t b e u s e d to d e sc r ib e th e lo s s o f
in te r e st that c o n su m e r s m a y in c u r for ea rly
w ith d r a w a l o f fu n d s from tim e a c c o u n ts.
2. E xam ples. E x a m p le s o f ea rly w ith d r a w a l
p e n a ltie s are:

(b)(4) Fees
1. C overed fees. T h e fo llo w in g are ty p e s o f
fe e s th a t m u st b e d is c lo s e d :
i. M a in te n a n c e fe e s, s u c h a s m o n th ly se r v ic e
fe e s
ii. F e e s to o p e n or to c lo s e a n a c c o u n t
iii. F e e s rela ted to d e p o s its or w ith d r a w a ls ,
s u c h as fe e s for u s e o f th e in s t itu t io n ’s
ATM s
iv . F e e s for s p e c ia l s e r v ic e s , s u c h a s sto p p a y m e n t fe e s, fe e s for b a la n c e in q u ir ie s
o r v e r ific a tio n o f d e p o s it s , fe e s
a s s o c ia te d w it h c h e c k s r etu rn ed u n p a id ,
a n d fe e s for r e g u la rly s e n d in g to
c o n su m e r s c h e c k s th at o th e r w is e w o u ld
b e h e ld b y th e in s titu tio n
2. O th er fees. I n s titu tio n s n e e d n o t d is c lo s e
fe e s s u c h as th e fo llo w in g :
i. F e e s for se r v ic e s o ffe r e d to a c c o u n t a n d
n o n a c c o u n t h o ld e r s a lik e , s u c h as
tr a v e le r s c h e c k s a n d w ir e tran sfers (e v e n
i f d iffe r e n t a m o u n ts are ch a rg ed to
a c c o u n t a n d n o n a c c o u n t h o ld e r s)
ii. In c id e n ta l fe e s, s u c h a s fe e s a ss o c ia te d
w it h sta te e s c h e a t la w s , g a r n ish m e n t or
a tto r n e y s fe e s, a n d fe e s for p h o to c o p y in g
3. Amount offees. I n stitu tio n s m u st state
th e a m o u n t a n d c o n d itio n s u n d e r w h ic h a fe e
m a y b e im p o s e d . N a m in g a n d d e sc r ib in g th e
fee (su c h a s “ $ 4 .0 0 m o n th ly s e r v ic e f e e ” ) w ill
ty p ic a lly sa tisfy th e s e r e q u ir e m e n ts.
4 . T ied-accou n ts. I n s titu tio n s m u s t sta te if
fe e s th a t m a y b e a s s e s s e d a g a in st an a c c o u n t
are tie d to o th e r a c c o u n ts at th e in stitu tio n .
F or e x a m p le , if an in s titu tio n tie s th e fe e s
p a y a b le o n a N O W a c c o u n t to b a la n c e s h e ld
in th e N O W a c c o u n t a n d a sa v ip g s a c c o u n t,
th e N O W a c c o u n t d is c lo s u r e s m u s t state that
fact a n d e x p la in h o w th e fe e is d e te r m in e d .

(b)(5) T ran saction lim ita tio n s
1.
G eneral rule. E x a m p le s o f lim ita tio n s o n
th e n u m b e r or d o lla r a m o u n t o f d e p o s its or
w ith d r a w a ls that in s titu tio n s m u s t d is c lo s e
are:
i. L im its o n th e n u m b e r o f c h e c k s that m a y
b e w r itte n o n an a c c o u n t w it h in a g iv e n
tim e p e r io d
ii. L im its o n w ith d r a w a ls or d e p o s its d u rin g
th e term o f a tim e a c c o u n t
iii. L im ita tio n s req u ired b y R e g u la tio n D o n
th e n u m b er o f w ith d r a w a ls p e r m itte d
from m o n e y m ark et d e p o s it a c c o u n ts b y
c h e c k to th ir d p a rties e a c h m o n th .
In s titu tio n s n e e d n o t d is c lo s e
r e se r v a tio n s o f righ t to req u ire n o tic e s for
w ith d r a w a ls from a c c o u n ts req u ired b y
fed era l or state law .

(b)(6) Features o f tim e a cco u n ts
(b)(6)(i) T im e re q u ir e m e n ts

i. Monetary penalties, such as “$10.00” or
“ s e v e n d a y s ’ in te r e st p lu s a c c r u e d b u t
u n c r e d ite d in te r e s t”

ii. Adverse changes to terms such as a
lo w e r in g o f th e in te r e st rate, a n n u a l
p er c e n ta g e y ie ld , or c o m p o u n d in g
fr e q u e n c y for fu n d s r e m a in in g o n
d e p o s it
iii. R e c la m a tio n o f b o n u s e s
3. R elation to ru les f o r IR A s or sim ila r
p la n s. P e n a ltie s im p o s e d b y th e In tern al
R e v e n u e C o d e for ce r ta in w ith d r a w a ls from
IR A s or sim ila r p e n s io n o r s a v in g s p la n s are
n o t e a r ly w ith d r a w a l p e n a ltie s for p u r p o se s
o f th is reg u la tio n .
4 . D isclosin g p en a lties. P e n a ltie s m a y b e
sta te d in m o n th s, w h e th e r in s titu tio n s a s s e s s
th e p e n a lty u s in g th e a c tu a l n u m b e r o f d a y s
d u r in g th e p e r io d or u s in g a n o th e r m e th o d
s u c h a s a n u m b e r o f d a y s th at o c c u r s in a n y
a c tu a l s e q u e n c e o f th e to ta l c a le n d a r m o n th s
in v o lv e d . For e x a m p le , s ta tin g “ o n e m o n t h ’s
in te r e s t” is p e r m is s ib le , w h e th e r th e
in s titu tio n a s s e s s e s 3 0 d a y s ’ in te r e st d u rin g
th e m o n th o f A p r il, or s e le c ts a tim e p e r io d
b e tw e e n 28 an d 31 d a y s for c a lc u la tin g th e
in te r e st for a ll ea rly w ith d r a w a ls r e g a rd less
o f w h e n th e p e n a lty is a s s e s s e d .

(b)(6)(iv) R en ew al p o lic ie s

1. Rollover time accounts. In s titu tio n s
o ffe r in g a grace p e r io d o n tim e a c c o u n ts that
a u to m a tic a lly r e n e w n e e d n o t state w h e th e r
in te r e st w ill b e p a id if th e fu n d s are
w ith d r a w n d u r in g th e gra ce p erio d .
2. N on rollover tim e accou n ts. In s titu tio n s
p a y in g in te r e st o n fu n d s f o llo w in g th e
m a tu r ity o f tim e a c c o u n ts th at d o n o t r e n e w
a u to m a tic a lly n e e d n o t sta te th e rate (or
a n n u a l p ercen ta g e y ie ld ) that m a y b e p aid .
(S e e A p p e n d ix B, M o d e l C la u se B l(h )(iv )(2 ).)

Section 230.5

Subsequent disclosures.

(a) C hange in term s
(a)(1) A d v a n c e n o tice req u ired
1. Form o f n otice. I n s titu tio n s m a y p r o v id e
a c h a n g e -in -te r m n o tic e o n or w ith a p e r io d ic
sta te m e n t or in a n o th e r m a ilin g . If an
in s titu tio n p r o v id e s n o tic e th r o u g h r e v is e d
a c c o u n t d is c lo s u r e s , th e c h a n g e d term m u s t
b e h ig h lig h te d in s o m e m a n n er . F or e x a m p le ,
in s titu tio n s m a y n o te th at a p a r tic u la r fee h a s
b e e n c h a n g e d (a lso s p e c ify in g th e n e w
a m o u n t) or u s e an a c c o m p a n y in g letter that
refers to th e c h a n g e d term .
2. E ffective date. A n e x a m p le o f la n g u a g e
for d is c lo s in g th e e ffe c tiv e d a te o f a c h a n g e
is “ A s o f N o v e m b e r 2 1 , 1 9 9 4 . ”
3. T erm s th a t ch an ge u pon th e o ccu rren ce
o f an even t. A n in s titu tio n o ffe r in g te r m s that
w ill a u to m a tic a lly c h a n g e u p o n th e
o c c u r r e n c e o f a sta ted e v e n t n e e d n o t se n d
an a d v a n c e n o tic e o f th e c h a n g e p r o v id e d th e

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in stitu tio n f u lly d e sc r ib e s th e c o n d itio n s o f
th e ch a n g e in th e a c c o u n t o p e n in g
d is c lo s u r e s (a n d s e n d s a n y ch a n g e -in -te r m
n o tic e s re g a r d le ss o f w h e th e r th e c h a n g e d
term a ffe c ts tha t c o n s u m e r ’s a c c o u n t at that
tim e).
4.
E xam ples. E x a m p le s o f c h a n g e s n o t
req u irin g an a d v a n c e ch a n g e -in -te r m s n o tic e
are:
i. T h e te r m in a tio n o f e m p lo y m e n t for
c o n su m e r s for w h o m a c c o u n t
m a in te n a n c e or a c tiv ity fe e s w e r e w a iv e d
d u r in g th e ir e m p lo y m e n t b y th e
d e p o sito r y in stitu tio n
ii. T h e e x p ir a tio n o f o n e y ea r in a p r o m o tio n
d e sc r ib e d in th e a c c o u n t o p e n in g
d is c lo s u r e s to “ w a iv e $ 4 .0 0 m o n th ly
s e r v ic e ch a rg es for o n e y e a r ”

i f a r o llo v e r tim e a c c o u n t is s u b s e q u e n tly
r e n ew e d :

w ith o u t triggerin g th e d is c lo s u r e s req u ired by
th is s e c tio n , a s lo n g as:

i. If th e c h a n g e is in itia te d b y th e in s titu tio n ,
th e d is c lo s u r e re q u ir e m e n ts o f th is
p aragraph a p p ly . (Paragraph 2 3 0 .5 (a )
a p p lie s if th e c h a n g e b e c o m e s e ffe c tiv e
p rio r to th e m a tu rity o f th e e x is tin g tim e
a c c o u n t.)
ii. If th e c h a n g e is in itia te d b y th e c o n su m e r ,
th e a c c o u n t o p e n in g d isc lo s u r e
re q u ir e m e n ts o f § 2 3 0 .4 (b ) a p p ly . (If th e
n o tic e req u ired b y th is paragraph h a s
b e e n p r o v id e d , in s titu tio n s m a y g iv e
n e w a c c o u n t d is c lo s u r e s or d is c lo s u r e s
h ig h lig h tin g o n ly th e n e w term .)

i. T h e in fo r m a tio n is lim ite d to th e a c c o u n t
n u m b er, th e ty p e o f a c c o u n t, or b a la n c e
in fo r m a tio n , an d
ii. T h e in s titu tio n a ls o p r o v id e s a p e r io d ic
sta te m e n t c o m p ly in g w ith th is s e c tio n
for e a c h a c c o u n t.

6.
E xam ple. If a c o n su m e r r e c e iv e s a
p rem a tu rity n o tic e o n a o n e -y e a r tim e
a c c o u n t a n d r e q u e sts a r o llo v e r to a six m o n th a c c o u n t, th e in stitu tio n m u s t p r o v id e
(a)(2) N o n o tic e req u ired
e ith e r a c c o u n t o p e n in g d is c lo s u r e s in c lu d in g
(a) (2)(H) C h eck p rin tin g fe e s
th e n e w m a tu rity d a te or, if a ll o th e r term s
1.
Increase in fees. A n o tic e is n o t r e q u ired p r e v io u s ly d is c lo s e d in th e p rem atu rity
for an in c r e a se in fe e s for p r in tin g c h e c k s (or
n o tic e rem a in th e sa m e , o n ly th e n e w
m a tu rity date.
d e p o s it a n d w ith d r a w a l slip s ) e v e n if th e
in s titu tio n a d d s s o m e a m o u n t to th e p r ic e
ch a rged b y th e v en d o r .

(b) N o tice before m a tu rity f o r tim e
a cco u n ts lo n g er than o n e m on th th at ren e w
a u to m a tic a lly
1. M a tu rity d a te s on n on bu sin ess d a ys. In
d e te r m in in g th e term o f a tim e a c c o u n t,
in stitu tio n s m a y d isreg a rd th e fact that th e
term w ill b e e x te n d e d b e y o n d th e d is c lo s e d
n u m b er o f d a y s b e c a u s e th e d is c lo s e d
m atu rity fa lls o n a n o n b u s in e s s d ay. F or
e x a m p le , a h o lid a y or w e e k e n d m a y c a u s e a
“ o n e -y e a r ” tim e a c c o u n t to e x te n d b e y o n d
3 6 5 d a y s (or 3 6 6 , in a le a p year) o r a “ o n e m o n th ” tim e a c c o u n t to e x te n d b e y o n d 31
d ays.
2. D isclosin g w hen ra tes w ill be
d eterm in ed . W a y s to d is c lo s e w h e n th e
a n n u a l p e r c e n ta g e y ie ld w ill b e a v a ila b le
in c lu d e th e u s e of:

i. A sp ecific date, su ch as “October 28 ”
ii. A d a te that is e a s ily d e te r m in a b le , s u c h as
“ the T u e s d a y b efo re th e m a tu rity d a te
sta ted o n th is n o tic e ” or “ as o f th e
m a tu rity d a te sta ted o n th is n o tic e ”
3. A ltern a tiv e tim in g rule. U n d e r th e
a ltern a tiv e tim in g r u le, an in stitu tio n o ffe r in g
a 10-d a y g race p e r io d w o u ld h a v e to p r o v id e
th e d is c lo s u r e s at le a st 1 0 d a y s p rior to th e
s c h e d u le d m a tu rity date.
4. Club accou n ts. If c o n su m e r s h a v e a g reed
to the tran sfer o f p a y m e n ts from a n o th er
a c c o u n t to a c lu b tim e a c c o u n t for th e n e x t
c lu b p e r io d , th e in s titu tio n m u st c o m p ly
w ith th e re q u ir e m e n ts for a u to m a tic a lly
r e n e w a b le tim e a c c o u n ts— e v e n th o u g h
c o n su m e r s m a y w ith d r a w fu n d s from th e
c lu b a c c o u n t at th e e n d o f th e cu rren t c lu b
p erio d .
5. R en ew al o f a tim e accou n t. In th e c a se
o f a c h a n g e in term s that b e c o m e s e ffe c tiv e




(b)

4.
O th er in form ation . A d d itio n a l
in fo r m a tio n that m a y b e g iv e n o n or w it h a
p e r io d ic sta te m e n t in c lu d e s:
i. In terest rates a n d c o r r e sp o n d in g p e r io d ic
rates a p p lie d to b a la n c e s d u rin g th e
sta te m e n t p e r io d
ii. T h e d o lla r a m o u n t o f in te rest ea rn ed yearto -d a te
iii. B o n u s e s p a id (or a n y d e m in im is
c o n s id e r a tio n o f $ 1 0 or le ss)
iv . F e e s for p r o d u c ts su c h as safe d e p o s it
boxes

(a)( 1) A n n u a l p ercen ta g e y ie ld earn ed
1.
L edger a n d c o lle c te d balan ces.
I n s titu tio n s that a c c r u e in te r e st u sin g th e

(1) M atu rities o f lon ger than on e y e a r
c o lle c t e d b a la n c e m e th o d m a y u s e eith e r th e
H ighlighting c h a n g ed term s. In s titu tio n s

1.
n e e d n o t h ig h lig h t term s that c h a n g e d s in c e
th e la st a c c o u n t d is c lo s u r e s w e r e p r o v id e d .

(c) N o tice fo r tim e a cco u n ts on e m o n th or
le s s th a t ren e w a u to m a tic a lly
1.
P rovidin g disc lo su res w ith in a
reason able tim e. G e n e r a lly , 10 c a le n d a r d a y s
after a n a c c o u n t r e n e w s is a r e a so n a b le tim e
for p r o v id in g d is c lo s u r e s . For tim e a c c o u n ts
sh o rter tha n 1 0 d a y s, d is c lo s u r e s s h o u ld be
g iv e n p rio r to th e n e x t r e n e w a l d ate. For
e x a m p le , if a tim e a c c o u n t a u to m a tic a lly
r e n e w s e v e r y s e v e n d a y s, d is c lo s u r e s ab ou t
an a c c o u n t that r e n e w s o n W e d n e sd a y ,
D e c e m b e r 7 ,1 9 9 4 , s h o u ld b e g iv e n p rior to
W e d n e sd a y , D e c e m b e r 14.

(d) N o tice before m a tu rity fo r tim e
accou n ts lon ger than on e y e a r th a t do n ot
ren ew a u to m a tic a lly
1.
S u bsequ en t accou n t. W h en fu n d s are
transferred f o llo w in g m atu rity o f a
n o n r o llo v e r tim e a c c o u n t, in s titu tio n s n e e d
n o t p r o v id e a c c o u n t d is c lo s u r e s u n le s s a n e w
a c c o u n t is e s ta b lish e d .

Section 230.6
disclosures.

Periodic statement

(a) G eneral rule
1. General. In s titu tio n s are n o t req u ired to
p r o v id e p e r io d ic sta te m e n ts. If th e y d o
p r o v id e sta te m e n ts, d is c lo s u r e s n e e d o n ly b e
fu r n is h e d to th e e x te n t a p p lic a b le . For
e x a m p le , if n o in te r e st is ea rn ed for a
sta te m e n t p e r io d , in s titu tio n s n e e d n o t state
that fact. Or, in s titu tio n s m a y d is c lo s e “ $ 0 ”
in te rest ea rn ed a n d “ 0 % ” a n n u a l p ercen ta g e
y ie ld ea rn ed .
2. R egulation E in terim sta tem en ts. W h en
an in stitu tio n p r o v id e s regu lar q u arterly
sta te m e n ts, a n d in a d d itio n p r o v id e s a
m o n th ly in te rim sta te m e n t to c o m p ly w ith
R e g u la tio n E, th e in te rim sta te m e n t n e e d n ot
c o m p ly w ith th is s e c tio n u n le s s it states
in te rest or rate in fo r m a tio n . (S e e 12 CFR
§ 2 0 5 .9 (b ).)
3. C o m b in ed sta tem en ts. I n s titu tio n s m a y
p r o v id e in fo r m a tio n ab ou t an a c c o u n t (su c h
as an M M D A ) o n th e p e r io d ic sta te m e n t for
a n o th er a c c o u n t (su c h as a N O W a c c o u n t)

le d g e r or th e c o lle c t e d b a la n c e in
d e te r m in in g th e a n n u a l p er c e n ta g e y ie ld
ea rn ed .

(a)(2) A m o u n t o f in terest
1. A c c ru e d in terest. I n s titu tio n s m u s t state
th e a m o u n t o f in te r e st that a ccru ed d u rin g
th e sta te m e n t p e r io d , e v e n if it w a s n ot
c r e d ite d .
2. T erm in ology. In d is c lo s in g in te rest
e a r n e d for th e p e r io d , in s titu tio n s m u s t u se
th e term “ in te r e s t” or te r m in o lo g y s u c h as:
i. “ In terest p a id ,” to d e sc r ib e in te r e st that h a s
b e e n c r e d ite d
ii. “ In terest a c c r u e d ” or “ in te rest e a r n e d ,” to
in d ic a te that in te r e st is n ot y et cre d ite d
3. C lo sed accou n ts. If c o n su m e r s c lo s e an
a c c o u n t b e tw e e n c r e d itin g p e r io d s an d
fo rfe its a c c r u e d in te r e st, th e in stitu tio n m ay
n o t s h o w a n y fig u r es for in te rest ea rn ed or
a n n u a l p e r c e n ta g e y ie ld ea rn ed for th e p erio d
(o th e r th a n zero , at th e in s titu tio n ’s o p tio n ).

(a)(3) F ees im p o s e d
1. General. P e r io d ic sta te m e n ts m u st state
fe e s d is c lo s e d u n d e r § 23 0 .4 (b ) that w e r e
d e b ite d to th e a c c o u n t d u rin g th e sta tem e n t
p e r io d , e v e n if a s s e s s e d for an earlier p erio d .
2. Ite m izin g f e e s b y type. In ite m iz in g fees
im p o s e d m o re th a n o n c e in th e p e r io d ,
in s titu tio n s m a y g ro u p fe e s if th e y are th e
sa m e ty p e . B ut th e d e sc r ip tio n m u st m ak e
c le a r that th e d o lla r figure r e p resen ts m ore
th a n a s in g le fee, for e x a m p le , “ total fe e s for
c h e c k s w r itte n th is p e r io d .” E x a m p le s o f fees
that m a y n o t b e g r o u p e d togeth er are:
i. M o n th ly m a in te n a n c e an d e x c e s s a c tiv ity
fe e s
ii. “ T r a n sfe r” fe e s, if d ifferen t d o lla r a m o u n ts
are im p o s e d — s u c h as $ .5 0 for d e p o sits
a n d $ 1 .0 0 for w ith d r a w a ls
iii. F e e s for e le c tr o n ic fu n d transfers an d foes
for o th e r se r v ic e s , su c h as b a la n ce
in q u ir y or m a in te n a n c e fe e s

/o 7 £ ?
Federal Register / Vol. 59, No. 151 / Monday, August 8, 1994 / Rules and Regulations
3. Iden tifyin g fe e s. Statement details must
enable consumers to identify the specific fee.
For example:
i. In s titu tio n s m a y u se a c o d e to id e n tify a
p a rticu la r fe e if th e c o d e is e x p la in e d o n
th e p e r io d ic sta te m e n t or in d o c u m e n ts
a c c o m p a n y in g th e sta tem e n t.
ii. In s titu tio n s u s in g d eb it s lip s m a y d is c lo s e
th e d a te th e fe e w a s d e b ite d o n th e
p e r io d ic s ta te m e n t a n d s h o w th e a m o u n t
a n d ty p e o f fe e o n th e d a te d d e b it s lip .
4. R ela tio n to R egulation E. D isc lo su r e o f
fe e s in c o m p lia n c e w ith R e g u la tio n E
c o m p lie s w ith th is se c tio n for fe e s r e la te d to
e le c tr o n ic fu n d tra n sfers (for e x a m p le ,
to ta lin g a ll e le c tr o n ic fu n d s tran sfer fe e s in
a s in g le fig u re).

(a)(4) Length o f p e r io d
1. General. In s titu tio n s p r o v id in g th e
b e g in n in g a n d e n d in g d a te s o f th e p e r io d
m u s t m a k e c le a r w h e th e r b o th d a te s are
in c lu d e d in th e p e r io d .
2. O p en in g o r clo sin g an a cco u n t m id ­
cycle. If a n a c c o u n t is o p e n e d o r c lo s e d
d u rin g th e p e r io d for w h ic h a sta te m e n t is
se n t, in s titu tio n s m u s t c a lc u la te th e a n n u a l
p ercen ta g e y ie ld e a r n e d b a se d o n a c c o u n t
b a la n c e s for e a c h d a y th e a c c o u n t w a s o p e n .

(b) S p ecia l ru le fo r average d a ily b alan ce
m eth o d
1. M o n th ly sta te m e n ts a n d q u a rterly
co m p o u n d in g . 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.
2. Length o f th e p erio d . In s titu tio n s m u s t
d is c lo s e th e le n g th o f b o th th e in te r e st
c a lc u la tio n p e r io d a n d th e sta te m e n t p erio d .
For e x a m p le , a sta te m e n t c o u ld d is c lo s e a
sta te m e n t p e r io d o f A p r il 1 6 th r o u g h M a y 15
an d furth er sta te that “ th e in te r e st e a r n e d and
th e a n n u a l p e r c e n ta g e y ie ld ea rn ed are b a se d
o n y o u r a v era g e d a ily b a la n c e for th e p erio d
A p ril 1 th r o u g h A p r il 3 0 .”
3. Q u a rterly s ta te m e n ts a n d m o n th ly
co m p o u n d in g . In s titu tio n s that u s e the
average d a ily b a la n c e m e th o d to c a lc u la te
in te rest o n a m o n th ly b a sis a n d that se n d
sta te m e n ts o n a q u arterly b a sis m a y d is c lo s e
a s in g le in te r e st (a n d a n n u a l p er c e n ta g e y ie ld
ea rn ed ) fig ure. A lte r n a tiv e ly , an in stitu tio n
m a y d is c lo s e th r e e in te rest a n d three a n n u a l
p ercen ta g e y ie ld ea rn ed fig u r es, o n e for ea ch
m o n th in th e q uarter, as lo n g as th e
in s titu tio n sta te s th e n u m b e r o f d a y s (or
b e g in n in g a n d e n d in g d a tes) in th e in te rest
p e r io d if d iffe r e n t from th e sta te m e n t p erio d .

Section 230.7 Payment of interest.
(a)(1) P erm issib le m e th o d s
1. P ro h ib ited ca lcu la tio n m eth o d s.
C a lc u la tio n m e th o d s th a t d o n o t c o m p ly w ith
th e r e q u ir e m e n t to p a y in te r e st o n th e fu ll




a m o u n t o f p r in c ip a l in th e a c c o u n t e a c h d a y
in c lu d e :
i. P a y in g in te r e st o n th e b a la n c e in th e
a c c o u n t at th e e n d o f th e p e r io d (th e
" e n d in g b a la n c e ” m e th o d )
ii. P a y in g in te r e st for th e p e r io d b a se d o n th e
lo w e s t b a la n c e in th e a c c o u n t for a n y
d a y in th at p e r io d (th e “ lo w b a la n c e ”
m e th o d )
iii. P a y in g in te r e st o n a p er c e n ta g e o f th e
b a la n c e , e x c lu d in g th e a m o u n t se t a s id e
for re se r v e re q u ir e m e n ts (th e “ in v e sta b le
b a la n c e ” m e th o d )
2. Use of365-day basis. In s titu tio n s m a y
a p p ly a d a ily p e r io d ic rate greater th a n 1/365
o f th e in te r e st rate— s u c h a s 1 /3 6 0 o f th e
in te r e st rate— a s lo n g as it is a p p lie d 365 d a y s
a year.
3. P erio d ic in terest p a ym en ts. A n
in s titu tio n c a n p a y in te r e st e a c h d a y o n th e
a c c o u n t a n d s t ill m a k e u n ifo r m in te r e st
p a y m e n ts . F or e x a m p le , for a o n e -y e a r
c e r tific a te o f d e p o s it an in s titu tio n c o u ld
m a k e m o n th ly in te r e st p a y m e n ts e q u a l to 1 /
12 o f th e a m o u n t o f in te r e st th at w i l l b e
e a r n e d for a 3 6 5 -d a y p e r io d (or 11 u n ifo r m
m o n th ly p a y m e n ts— e a c h e q u a l to r o u g h ly 1 /
12 o f th e to ta l a m o u n t o f in te r e st— a n d o n e
p a y m e n t th at a c c o u n ts for th e r e m a in d e r o f
th e to ta l a m o u n t o f in te r e st ea rn ed for th e
p erio d ).
4. Leap year. In s titu tio n s m a y a p p ly a d a ily
rate o f 1 /3 6 6 or 1 /3 6 5 o f th e in te r e st rate for
3 6 6 d a y s in a le a p year, i f th e a c c o u n t w ill
earn in te r e st for F ebruary 29.
5. Maturity of time accounts. In s titu tio n s
are n o t re q u ir e d to p a y in te r e st after tim e
a c c o u n ts m a tu re. (S e e 12 CFR part 2 1 7 , th e
B o a r d ’s R e g u la tio n Q , for lim ita tio n s o n
d u r a tio n o f in te r e st p a y m e n ts.) E x a m p le s
in c lu d e :
i. D u rin g a g ra ce p e r io d o ffer ed for an
a u to m a tic a lly r e n e w a b le tim e a c c o u n t, if
c o n s u m e r s d e c id e d u r in g that p e r io d n o t
to r e n e w th e a c c o u n t
ii. F o llo w in g th e m a tu rity o f n o n r o llo v e r tim e
a c c o u n ts
iii. W h en th e m a tu rity d a te fa lls o n a h o lid a y ,
a n d c o n s u m e r s m u s t w a it u n til th e n e x t
b u s in e s s d a y to o b ta in th e fu n d s
6. D orm an t accou n ts. In s titu tio n s m u s t p a y
in te rest on fu n d s in an a c c o u n t, e v e n if
in a c tiv ity or th e in fr e q u e n c y o f tra n sa c tio n s
w o u ld p e r m it th e in s titu tio n to c o n s id e r th e
a c c o u n t to b e " in a c tiv e ” or " d o rm a n t” (or
sim ila r sta tu s) a s d e fin e d b y state or o th e r
la w or th e a c c o u n t con tract.

(a)(2) D eterm in ation o f m in im u m balan ce
to earn in terest
1. D a ily b a la n ce accou n ts. In s titu tio n s that
req u ire a m in im u m b a la n c e m a y c h o o s e n o t
to p ay in te r e st for d a y s w h e n th e b a la n c e
d ro p s b e lo w th e req u ired m in im u m , if th e y
u se th e d a ily b a la n c e m e th o d to c a lc u la te
in te rest.
2. A verage d a ily b alan ce accou n ts.

In s titu tio n s that req u ire a m in im u m b a la n c e
m a y c h o o s e n o t to p a y in te r e st for th e p e r io d
in w h ic h th e b a la n c e d ro p s b e lo w the
r e q u ired m in im u m , if th e y u s e th e a v erage
d a ily b a la n c e m e th o d to c a lc u la te in te r e st.
3. Beneficial method. In s titu tio n s m a y n o t
req u ire that c o n su m e r s m a in ta in b o th a
m in im u m d a ily b a la n c e a n d a m in im u m
av era g e d a ily b a la n c e to earn in te r e st, su c h

40225

as b y r eq u irin g c o n s u m e r s to m a in ta in a $ 5 0 0
d a ily b a la n c e a n d a p r e sc r ib e d a v era g e d a ily
b a la n c e (w h e th e r h ig h e r or lo w e r ). B u t an
in s titu tio n c o u ld o ffer a m in im u m b a la n c e to
earn in te r e st th at in c lu d e s an a d d itio n a l
m e th o d that is “ u n e q u iv o c a lly b e n e f ic ia l” to
c o n s u m e r s s u c h as th e fo llo w in g : A n
in s titu tio n u s in g th e d a ily b a la n c e m e th o d to
c a lc u la te in te r e st a n d r e q u ir in g a $ 5 0 0
m in im u m d a ily b a la n c e c o u ld o ffer to p a y
in te r e st o n th e a c c o u n t for th o s e d a y s th e
m in im u m b a la n c e is n o t m e t a s lo n g as
c o n su m e r s m a in ta in a n average d a ily b a la n c e
th r o u g h o u t th e m o n th o f $ 4 0 0 .
4. P ayin g on f u ll balan ce. In s titu tio n s m u s t
p a y in te r e st o n th e fu ll b a la n c e in th e
a c c o u n t that m e e ts th e req u ired m in im u m
b a la n c e . F or e x a m p le , i f $ 3 0 0 is th e
m in im u m d a ily b a la n c e req u ired to earn
in te r e st, a n d a c o n s u m e r d e p o s its $ 5 0 0 , th e
in s titu tio n m u s t p a y th e sta ted in te r e st rate
o n th e fu ll $ 5 0 0 a n d n o t ju st o n $ 2 0 0 .
5. N eg a tive b a la n ces pro h ib ited .
In s titu tio n s m u s t treat a n e g a tiv e a c c o u n t
b a la n c e as ze r o to d eterm in e:
i. T h e d a ily or a v era g e d a ily b a la n c e o n
w h ic h in te r e st w ill b e p a id
ii. W h e th e r a n y m in im u m b a la n c e to earn
in te r e st is m e t
6. Club a cco u n ts. In s titu tio n s o ffe r in g clu b
a c c o u n ts ( s u c h a s a “ h o lid a y ” or “ v a c a tio n ”
c lu b ) c a n n o t im p o s e a m in im u m b a la n c e
req u ir e m e n t for in te r e st b a se d o n th e to ta l
n u m b e r or d o lla r a m o u n t o f p a y m e n ts
req u ired u n d e r th e c lu b p la n . F or e x a m p le ,
if a p la n c a lls for $ 1 0 w e e k ly p a y m e n ts for
5 0 w e e k s , th e in s titu tio n c a n n o t se t a $ 5 0 0
“ m in im u m b a la n c e ” a n d th e n p a y in te r e st
o n ly i f th e c o n s u m e r h a s m a d e a ll 5 0
p a y m e n ts.
7. M in im u m b a la n ces n o t affectin g in terest.
In s titu tio n s m a y u s e th e d a ily b a la n c e ,
average d a ily b a la n c e , or a n y o th e r
c o m p u ta tio n m e th o d to c a lc u la te m in im u m
b a la n c e r e q u ir e m e n ts n o t in v o lv in g th e
p a y m e n t o f in te r e st— su c h as to c o m p u te
m in im u m b a la n c e s for a s s e s s in g fe e s.

(b) C o m p o u n d in g a n d cred itin g p o lic ie s
1. General. In s titu tio n s c h o o s in g to
c o m p o u n d in te r e st m a y c o m p o u n d or c r e d it
in te r e st a n n u a lly , s e m i-a n n u a lly , q u arterly,
m o n th ly , d a ily , c o n tin u o u s ly , or o n a n y o th e r
b a sis.

2.

W ith draw als p rio r to creditin g date.

If

c o n su m e r s w ith d r a w fu n d s (w ith o u t c lo s in g
th e a c c o u n t) p rio r to a s c h e d u le d c r e d itin g
d a te , in s titu tio n s m a y d e la y p a y in g th e
a c c r u e d in te r e st o n th e w ith d r a w n a m o u n t
u n til th e s c h e d u le d c r e d itin g d a te , b u t m a y
n o t a v o id p a y in g in te rest.
3. C lo sed a cco u n ts. S u b je c t to sta te or o th e r
la w , an in s titu tio n m a y c h o o s e n o t to p a y
a c c r u e d in te r e st if c o n s u m e r s c lo s e an
a c c o u n t p rio r to th e d a te a c c r u e d in te r e st is
c r e d ite d , as lo n g as th e in s titu tio n h a s
d is c lo s e d that fact.

(c) D ate in terest begin s to accru e
1. R elation to R egulation CC. In s titu tio n s
m a y r e ly o n th e E x p e d ite d F u n d s A v a ila b ility
A c t (E F A A ) a n d R e g u la tio n CC (12 CFR part
2 2 9 ) to d e te r m in e , for e x a m p le , w h e n a
d e p o s it is c o n s id e r e d m a d e for p u r p o s e s o f
in te r e st a c c r u a l, or w h e n in te r e st n e e d n o t be
p a id o n fu n d s b e c a u s e a d e p o s ite d c h e c k is
later r e tu r n e d u n p a id .

/07A?
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2. L edger a n d c o lle c te d balan ces.
In s titu tio n s m a y c a lc u la te in te r e st b y u s in g a
“ le d g e r ” or “ c o lle c t e d ” b a la n c e m e th o d , as
lo n g as th e c r e d itin g r e q u irem en ts o f th e
E F A A are m e t (1 2 CFR 2 2 9 .1 4 ).
3. W ith draw al o f p rin cip al. I n s titu tio n s
m u st a c c r u e in te r e st o n fu n d s u n til th e fu n d s
are w ith d r a w n from th e a c co u n t. For
e x a m p le , if a c h e c k is d e b ite d to an a c c o u n t
o n a T u e s d a y , th e in stitu tio n m u st a ccru e
in te rest o n th o s e fu n d s through M o n d a y .

Section 230.8

Advertising.

(a) M islea d in g or in a ccu rate
a d v e rtise m e n ts
1. General. A ll a d v e r tise m e n ts are su b ject
to th e r u le a g a in st m is le a d in g or in a ccu ra te
a d v e r tise m e n ts, e v e n th o u g h th e d is c lo s u r e s
a p p lic a b le to v a r io u s m e d ia differ.
2. In d o o r sign s. A n in d o o r sig n a d v e r tisin g
an a n n u a l p e r c e n ta g e y ie ld is n o t m is le a d in g
or in a c c u r a te w h e n :
i. For a tiered -r a te a c c o u n t, it a lso p r o v id e s
th e lo w e r d o lla r a m o u n t o f the tier 1
c o r r e sp o n d in g to th e a d v e r tise d a n n u a l
p e r c e n ta g e y ie ld
ii. For a tim e a c c o u n t, it a lso p r o v id e s the
term r e q u ired to o b ta in th e a d v e r tise d
a n n u a l p e r c e n ta g e y ie ld
3. Fees a ffectin g “f r e e ” accou n ts. For
p u r p o se s o f d e te r m in in g w h e th e r an a c c o u n t
c a n b e a d v e r tise d a s “ free” or “ n o c o s t,”
m a in te n a n c e a n d a c tiv ity fe e s in c lu d e :
i. A n y fe e im p o s e d w h e n a m in im u m b a la n c e
r e q u ir e m e n t is n o t m et, or w h e n
c o n s u m e r s e x c e e d a sp e c ifie d n u m b e r o f
tr a n sa c tio n s
ii. T r a n sa c tio n a n d s e r v ic e fe e s that
c o n s u m e r s r e a so n a b ly e x p e c t to be
im p o s e d o n a regu lar b a sis
iii. A flat fe e , s u c h a s a m o n th ly se r v ic e fee
iv. F ees im p o s e d to d e p o s it, w ith d r a w , or
tran sfer fu n d s , in c lu d in g p e r -c h e c k or
p e r -tr a n sa ctio n c h a rg es (for e x a m p le ,
$ .2 5 for e a c h w ith d r a w a l, w h e th e r by
c h e c k o r in p e rso n )
4. O th er fees. E x a m p le s o f fees that are n o t
m a in te n a n c e o r a c tiv ity fe e s in c lu d e :
i. F e e s n o t req u ired to b e d is c lo s e d u n d er
§ 2 3 0 .4 (b )(4 )
ii. C h eck p r in tin g fe e s
iii. B a la n c e in q u ir y fees
iv. S to p -p a y m e n t fe e s a n d fe e s a ss o c ia te d
w ith c h e c k s r etu rn ed u n p a id
v. F ees a s s e s s e d a g a in st a d o rm a n t a c c o u n t
v i. F e e s for A T M or e le c tr o n ic transfer
s e r v ic e s (su c h as p rea u th o r iz e d tran sfers
or h o m e b a n k in g se r v ic e s) n o t req u ired
to o b ta in an a c c o u n t
5. S im ila r term s. A n a d v e r tise m e n t m ay
n ot u s e th e term “ fe e s w a iv e d ” if a
m a in te n a n c e or a c tiv ity fe e m a y b e im p o s e d
b e c a u se it is sim ila r to th e term s " fre e” or
“ n o c o s t.”
6. S p ecific a cco u n t services. I n s titu tio n s
m a y a d v e r tise a s p e c ific a c c o u n t se r v ic e or
featu re a s free if n o fee is im p o s e d for that
se r v ic e or fea tu re. F or e x a m p le , in s titu tio n s
o ffer in g a n a c c o u n t that is free o f d e p o s it or
w ith d r a w a l fe e s c o u ld a d v e r tise that fact, as
lo n g as th e a d v e r tise m e n t d o e s n o t m is le a d
c o n su m e r s b y im p ly in g that th e a c c o u n t is
free a n d that n o o th e r fee (a m o n th ly s e n d e e
fee. for e x a m p le ) m a y b e ch arged .




7. Free fo r lim ite d tim e. If an a c c o u n t (or
a s p e c ific a c c o u n t se r v ic e ) is free o n ly for a
lim ite d p e r io d o f tim e — for e x a m p le , for o n e
y ea r f o llo w in g th e a c c o u n t o p e n in g — th e
a c c o u n t (or se r v ic e ) m a y b e a d v e r tise d as free
if th e tim e p e r io d is a ls o stated .
8. C o n d itio n s n o t re la te d to d e p o sit
accou n ts. I n s titu tio n s m a y a d v e r tise a c c o u n ts
as “ fr e e ” for c o n s u m e r s m e e tin g c o n d itio n s
n o t re la te d to d e p o s it a c c o u n ts, s u c h as th e
c o n s u m e r ’s age. F or e x a m p le , in stitu tio n s
m a y a d v e r tise a N O W a c c o u n t a s “ free for
p e r s o n s o v e r 6 5 y e a r s o ld ,” e v e n th o u g h a
m a in te n a n c e or a c tiv ity fee is a s s e s s e d o n
a c c o u n ts h e ld b y c o n s u m e r s 6 5 or y o u n g er.

(b) P erm issib le rates
1. T iered-rate accou n ts. A n a d v e r tise m e n t
for a tiered -r a te a c c o u n t that sta te s an an n u a l
p er c e n ta g e y ie ld m u s t a ls o sta te th e a n n u a l
p er c e n ta g e y ie ld for e a c h tier, a lo n g w ith
c o r r e sp o n d in g m in im u m b a la n c e
r e q u ir e m e n ts. A n y in te r e st rates sta ted m u st
a p p ea r in c o n ju n c tio n w ith th e a p p lic a b le
a n n u a l p e r c e n ta g e y ie ld s for e a c h tier.
2. S te p p e d -ra te accou n ts. A n
a d v e r tise m e n t th at sta te s an in te r e st rate for
a ste p p e d -r a te a c c o u n t m u s t state a ll th e
in te rest ra tes a n d th e tim e p e r io d that ea ch
rate is in effe ct.
3. R e p resen ta tive ex a m p les. A n
a d v e r tise m e n t that sta te s an an n u a l
p e rcen ta g e y ie ld for a g iv e n ty p e o f a c c o u n t
(su c h as a tim e a c c o u n t for a s p e c ifie d term )
n e e d n o t sta te th e a n n u a l p er c e n ta g e y ie ld
a p p lic a b le to o th e r tim e a c c o u n ts o ffer ed by
th e in s titu tio n or in d ic a te that o th e r m a tu rity
term s are a v a ila b le . In an a d v e r tise m e n t
sta tin g that ra tes for a n a c c o u n t m ay vary
d e p e n d in g o n th e a m o u n t o f th e in itia l
d e p o s it or th e term o f a tim e a c c o u n t,
in s titu tio n s n e e d n o t lis t e a c h b a la n c e le v e l
an d term o ffer ed . In ste a d , th e a d v e r tise m e n t
m ay:
i. P r o v id e a r e p r e s e n ta tiv e e x a m p le o f the
a n n u a l p e r c e n ta g e y ie ld s o ffer ed , c le a r ly
d e sc r ib e d as s u c h . F or e x a m p le , if an
in s titu tio n o ffe r s a $ 2 5 b o n u s o n a ll tim e
a c c o u n ts a n d th e a n n u a l p e r c e n ta g e
y ie ld w ill vary d e p e n d in g o n th e term
s e le c te d , th e in s titu tio n m a y p r o v id e a
d is c lo s u r e o f th e a n n u a l p ercen ta g e y ie ld
a s fo llo w s: “ F or e x a m p le , o u r 6 -m o n th
c e r tific a te o f d e p o s it cu r r e n tly p a y s a
3 .1 5 % a n n u a l p e r c e n ta g e y ie ld .”
ii. In d ic a te that v a r io u s rates are a v a ila b le ,
s u c h as b y sta tin g sh ort-term an d lon gerterm m a tu r itie s a lo n g w ith th e a p p lic a b le
a n n u a l p e r c e n ta g e y ie ld s: “ W e offer
c e r tific a te s o f d e p o s it w ith a n n u a l
p e r c e n ta g e y ie ld s that d e p e n d o n the
m a tu r ity y o u c h o o s e . F or e x a m p le , ou r
o n e -m o n th CD ea rn s a 2.75% A P Y . Or,
ea rn a 5 .2 5 % A P Y for a three-y ea r CD."

(c) W hen a d d itio n a l d isclo su res are
requ ired
1. Trigger term s. T h e fo llo w in g are
e x a m p le s o f in fo r m a tio n sta ted in
a d v e r tise m e n ts th at are n o t “ trigger” term s:
i. " O n e . th r ee, a n d fiv e y ear C D s a v a ila b le ”
ii. “ B o n u s ra tes a v a ila b le "
iii. “ 1% o v e r o u r c u rren t r a te s,” s o lo n g as
th e ra tes are n o t d e te r m in a b le from th e
a d v e r tise m e n t

(c)(2) T im e a n n u a l p ercen ta g e y ie ld is
offered

1. S p e c ifie d d a te. If an a d v e r tise m e n t
d is c lo s e s ah a n n u a l p e rcen ta g e y ie ld a s o f a
s p e c ifie d d a te , th at d a te m u s t b e r ece n t in
r e la tio n to th e p u b lic a tio n or b road cast
fr e q u e n c y o f th e m e d ia u s e d , ta k in g in to
a c c o u n t th e p a r tic u la r c ir c u m sta n c e s or
p r o d u c tio n d e a d lin e s in v o lv e d . For e x a m p le ,
th e p r in tin g d a te o f a b ro ch u re p rin te d o n c e
for a d e p o s it a c c o u n t p r o m o tio n that w ill b e
in e ffe c t for s ix m o n th s w o u ld be c o n sid e r e d
“ r e c e n t,” e v e n th o u g h rates c h a n g e d u rin g
th e s ix -m o n th p e r io d . R ates p u b lis h e d in a
d a ily n e w s p a p e r or o n te le v is io n m u s t reflect
rates o ffe r e d sh o r tly b e fo r e (or on ) th e d ate
th e rates are p u b lis h e d or b road cast.
2. R eferen ce to d a te o f pu blication . A n
a d v e r tise m e n t m a y refer to th e an n u a l
p e r c e n ta g e y ie ld as b e in g accu rate as o f the
d a te o f p u b lic a tio n , i f th e d ate is on th e
p u b lic a tio n itse lf. F or in sta n c e , an
a d v e r tise m e n t in a p e r io d ic a l m ay state that
a rate is “ c u rren t th r o u g h th e d a te o f th is
i s s u e ,” if th e p e r io d ic a l s h o w s th e date.

(c)(5) E ffect o f fe e s
1. S co p e. T h is req u ir e m e n t a p p lie s o n ly to
m a in te n a n c e or a c tiv ity fees d e sc r ib e d in
paragraph 8(a).

(c)(6) F eatu res o f tim e a cco u n ts
(c)(6)(i) T im e req u irem en ts
1. C lub a cco u n ts. If a c lu b a c c o u n t h as a
m a tu r ity d a te bu t th e term m ay vary
d e p e n d in g o n w h e n th e a c c o u n t is o p e n e d ,
in s titu tio n s m a y u s e a p h ra se s u c h as: “ T h e
m a tu r ity d a te o f t h is c lu b a c c o u n t is
N o v e m b e r 15; its term v a r ie s d e p e n d in g on
w h e n th e a c c o u n t is o p e n e d .”

(c) (6)(H) E arly w ith d ra w a l p en a lties
1. D isc retio n a ry p e n a ltie s. I n s titu tio n s
im p o s in g e a r ly w ith d r a w a l p e n a ltie s o n a
c a s e -b y -c a se b a sis m a y d is c lo s e that th e y
“ m a y ” (rath er th a n “ w i l l ” ) im p o s e a p e n a lty
if s u c h a d is c lo s u r e a c c u r a te ly d e sc r ib e s th e
a c c o u n t term s.

(d ) B on u ses
1. G eneral referen ce to “b o n u s." G en eral
sta te m e n ts s u c h as “ b o n u s c h e c k in g ” or “get
a b o n u s w h e n y o u o p e n a c h e c k in g a c c o u n t"
d o n o t trigger th e b o n u s d isc lo s u r e s.

(e) E xem ption f o r certain a d vertisem en ts
(e)( 1) C ertain m ed ia
(e)(l)(iii)
1. T iered -ra te a cco u n ts. S o lic ita tio n s for a
tiered -r a te a c c o u n t m a d e through t e le p h o n e
r e s p o n s e m a c h in e s m u s t p r o v id e th e a n n u a l
p e r c e n ta g e y ie ld s a n d th e b a la n ce
r e q u ir e m e n ts a p p lic a b le to ea ch tier.

(e)(2) In d o o r sign s
(e)(2)(i)
1. G eneral. In d o o r s ig n s in c lu d e
a d v e r tis e m e n ts d is p la y e d o n c o m p u te r
s c r e e n s , b a n n e r s, p r e p r in te d p o sters, an d
c h a lk or p e g b o a rd s. A n y a d v e r tise m e n t
in s id e th e p r e m is e s that c a n b e r eta in ed by
a c o n s u m e r (su c h as a b ro ch u re or a p rin tou t
from a c o m p u te r ) is n o t a n in d o o r sig n .
2. C on su m ers o u tsid e th e prem ises.
A d v e r tis e m e n ts m a y b e “ in d o o r s ig n s ” e v e n
th o u g h th e y m a y b e v ie w e d b y c o n su m e r s
from o u ts id e . A n e x a m p le is a b an n er, in an
in s t itu t io n ’s g la s s -e n c lo s e d b ran ch o ffic e ,
that is lo c a te d b e h in d a te lle r fa cin g
c u sto m e r s b u t is r e a d a b le b y p a ssersb y .

Section 230.9 Enforcement and record
retention.
(c)

R eco rd reten tio n

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1. E vid en ce o f req u ired a ctio n s. I n s titu tio n s
c o m p ly w it h th e reg u la tio n b y d e m o n str a tin g
that th e y h a v e d o n e th e fo llo w in g :
i. E s ta b lis h e d a n d m a in ta in e d p r o c e d u r e s for
p a y in g in te r e st a n d p r o v id in g tim e ly
d is c lo s u r e s as req u ired b y th e re g u la tio n ,
and
ii. R e ta in e d sa m p le d is c lo s u r e s for e a c h ty p e
o f a c c o u n t o ffer ed to c o n su m e r s , s u c h as
a c c o u n t-o p e n in g d is c lo s u r e s , c o p ie s o f
a d v e r tise m e n ts, a n d c h a n g e -in -te r m
n o tic e s; a n d in fo r m a tio n reg a rd in g th e
in te r e st ra tes an d a n n u a l p e rcen ta g e
y ie ld s o ffered .
2. M e th o d s o f retain in g evid en ce.
In s titu tio n s m u s t b e a b le to r e c o n str u c t th e
r e q u ired d is c lo s u r e s or o th e r a c tio n s. T h e y
n e e d n o t k e e p d is c lo s u r e s o r o th e r b u s in e s s
rec o r d s in h ard c o p y . R e co r d s e v id e n c in g
c o m p lia n c e m a y b e re ta in e d o n m ic r o film ,
m ic r o fic h e , or b y o th e r m e th o d s that
r e p r o d u c e r e c o r d s a c c u r a te ly (in c lu d in g
c o m p u te r file s).
3. P a ym en t o f in terest. In s titu tio n s m u s t
retain s u ffic ie n t rate a n d b a la n c e in fo r m a tio n
to p e r m it th e v e r ific a tio n o f in te r e st p a id o n
an a c c o u n t, in c lu d in g th e p a y m e n t o f in te rest
o n th e fu ll p r in c ip a l b a la n c e .

Appendix A to Part 230—Annual
Percentage Yield Calculation
Part I. Annual Percentage Yield for
Account Disclosures and Advertising
Purposes
1. R ou n d in g fo r ca lcu la tio n s. T h e
f o llo w in g are e x a m p le s o f p e r m iss ib le
r o u n d in g for c a lc u la tin g in te r e st a n d th e
a n n u a l p e r c e n ta g e y ie ld :
i. T h e d a ily rate a p p lie d to a b a la n c e carried
to fiv e or m o re d e c im a l p la c e s
ii. T h e d a ily in te r e st ea rn ed ca rried to fiv e or
m o r e d e c im a l p la c e s

Part II. Annual Percentage Yield Earned
for Periodic Statements
1. B a la n ce m eth o d . T h e in te r e st fig u re u s e d
in th e c a lc u la tio n o f th e a n n u a l p ercen ta g e
y ie ld e a r n e d m a y b e d e r iv e d from th e d a ily
b a la n c e m e th o d or th e a v era g e d a ily b a la n c e
m e th o d . T h e b a la n c e u s e d in th e fo rm u la for
th e a n n u a l p e r c e n ta g e y ie ld ea rn ed is th e
su m o f th e b a la n c e s for e a c h d a y in th e
p e r io d d iv id e d b y th e n u m b er o f d a y s in the
p e r io d .
2. N eg a tive b a lan ces p ro h ib ited .
I n s titu tio n s m u s t treat a n e g a tiv e a c c o u n t
b a la n c e as ze r o to d e te r m in e th e b a la n c e on
w h ic h th e a n n u a l p e r c e n ta g e y ie ld ea rn ed is
c a lc u la te d . (See c o m m e n ta r y to § 2 3 0 .7 (a )(2 ).)




A. General Formula
1. Accrued but uncredited interest. T o
c a lc u la te th e a n n u a l p e r c e n ta g e y ie ld e a rn ed ,
a c c r u e d b u t u n c r e d ite d in terest:
i. M ay n o t b e in c lu d e d in th e b a la n c e for
sta te m e n ts is s u e d at th e sa m e tim e or
le s s fr e q u e n tly th a n th e a c c o u n t’s
c o m p o u n d in g a n d c r e d itin g freq u en cy .
F or e x a m p le , if m o n th ly s ta te m e n ts are
se n t for an a c c o u n t that c o m p o u n d s
in te r e st d a ily a n d c r e d its in te r e st
m o n th ly , th e b a la n c e m a y n o t b e
in c r e a s e d e a c h d a y to r e fle c t th e effe c t o f
d a ily c o m p o u n d in g .
ii. M u st b e in c lu d e d in th e b a la n c e for
s u c c e e d in g s ta te m e n ts if a sta te m e n t is
is s u e d m o re fr e q u e n tly th a n
c o m p o u n d e d in te r e st is c r e d ite d o n an
a c c o u n t. F or e x a m p le , if m o n th ly
sta te m e n ts are s e n t for an a c c o u n t that
c o m p o u n d s in te r e st d a ily a n d c r e d its
in te r e st q u arterly, th e b a la n c e for th e
s e c o n d m o n th ly sta te m e n t w o u ld
in c lu d e in te r e st that h a d a c c r u e d for th e
p rio r m o n th .
2. Rounding. T h e in te r e st e a r n e d figure
u s e d to c a lc u la te th e a n n u a l p e r c e n ta g e y ie ld
ea rn ed m u s t b e r o u n d e d to t w o d e c im a ls a n d
re fle c t th e a m o u n t a c tu a lly p a id . For
e x a m p le , i f th e in te r e st ea rn ed for a sta te m e n t
p e r io d is $ 2 0 ,0 7 4 a n d th e in s titu tio n p a y s th e
c o n s u m e r $ 2 0 .0 7 , th e in s titu tio n m u s t u s e
$ 2 0 .0 7 (n o t $ 2 0 ,0 7 4 ) to c a lc u la te th e a n n u a l
p e r c e n ta g e y ie ld ea rn ed . F or a c c o u n ts p a y in g
in te r e st b a se d o n th e d a ily b a la n c e m e th o d
that c o m p o u n d a n d c r e d it in te r e st q u arterly,
a n d s e n d m o n th ly sta te m e n ts , th e in s titu tio n
m a y , b u t n e e d n o t, r o u n d a c c r u e d in te r e st to
t w o d e c im a ls for c a lc u la tin g th e a n n u a l
p e r c e n ta g e y ie ld ea rn ed o n th e first t w o
m o n th ly s ta te m e n ts is s u e d d u r in g th e
q uarter. H o w e v e r , o n th e q u arterly sta te m e n t
th e in te r e st ea rn ed fig u r e m u s t r e fle c t th e
a m o u n t a c tu a lly p a id .

B. Special Formula for Use Where
Periodic Statement is Sent More Often
Than the Period for Which Interest is
Compounded
1. Statements triggered by Regulation E.
In s titu tio n s m a y , b u t n e e d n o t, u s e th is
fo rm u la to c a lc u la te th e a n n u a l p e rcen ta g e
y ie ld ea rn ed for a c c o u n ts that r e c e iv e
q u a rterly s ta te m e n ts a n d are su b ject to
R e g u la tio n E ’s r u le c a llin g for m o n th ly
sta te m e n ts w h e n an e le c tr o n ic fu n d transfer
h a s o c c u r r e d . T h e y m a y d o s o e v e n th o u g h
n o m o n th ly sta te m e n t w a s is s u e d d u rin g a
s p e c ific quarter. B ut in s titu tio n s m u st u se
th is fo rm u la for a c c o u n ts that c o m p o u n d an d
c r e d it in te r e st q u arterly a n d r e c e iv e m o n th ly
sta te m e n ts th a t, w h ile triggered by
R e g u la tio n E, c o m p ly w ith th e p r o v is io n s o f
§ 2 3 0 .6 .
2. Days in compounding period.
In s titu tio n s u s in g th e s p e c ia l a n n u a l
p e r c e n ta g e y ie ld ea rn ed fo rm u la m u s t u s e th e
a c tu a l n u m b e r o f d a y s in th e c o m p o u n d in g
p e r io d .

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c o m p lia n c e a s lo n g as th e y d o n o t d e le te
re q u ir e d in fo r m a tio n or rearrange th e form at
in a w a y th a t a ffe c ts th e su b s ta n c e or cla r ity
o f th e d is c lo s u r e s .
2. Format. In s titu tio n s m a y u s e in se r ts to
a d o c u m e n t ( s e e S a m p le F orm B - 4 ) or fill-in
b la n k s (s e e S a m p le F o rm s B - 5 , B - 6 a n d B 7, w h ic h u s e u n d e r lin in g to in d ic a te term s
that h a v e b e e n f ille d in ) to s h o w cu rren t
rates, fe e s , or o th e r term s.
3. Disclosures for opening accounts. T h e
sa m p le fo rm s illu str a te th e in fo r m a tio n that
m u s t b e p r o v id e d to c o n su m e r s w h e n an
a c c o u n t is o p e n e d , a s r e q u ired b y
§ 2 3 0 .4 (a )(1 ). (S e e § 2 3 0 .4 (a )(2 ), w h ic h sta tes
th e r e q u ir e m e n ts for d is c lo s in g th e a n n u a l
p e r c e n ta g e y ie ld , th e in te rest rate, a n d th e
m a tu r ity o f a tim e a c c o u n t in r e s p o n d in g to
a c o n s u m e r ’s req u est.)
4. Compliance with Regulation E.
I n s titu tio n s m a y sa tisfy c e rta in re q u ir e m e n ts
u n d e r R e g u la tio n D D w ith d is c lo s u r e s that
m e e t th e r e q u ir e m e n ts o f R e g u la tio n E. (S e e
§ 2 3 0 .3 (c ).) F or d is c lo s u r e s c o v e r e d b y b o th
th is r e g u la tio n a n d R e g u la tio n E (su c h as th e
a m o u n t o f f e e s for A T M u sa g e , in s titu tio n s
sh o u ld c o n s u lt a p p e n d ix A to R e g u la tio n E
for a p p r o p r ia te m o d e l c la u s e s .
5. Duplicate disclosures. If a req u ir e m e n t
s u c h a s a m in im u m b a la n c e a p p lie s to m o re
th a n o n e a c c o u n t term (to o b ta in a b o n u s an d
d e te r m in e t h e a n n u a l p e r c e n ta g e y ie ld , for
e x a m p le ), in s titu tio n s n e e d n o t re p e a t th e
r e q u ir e m e n t for e a c h term , as lo n g as it is
c le a r w h ic h te r m s th e req u ir e m e n t a p p lie s to.
6 . Sample forms. T h e sa m p le fo rm s (B—
4
th r o u g h B - 8 ) se r v e a p u r p o se d iffe r e n t from
th e m o d e l c la u s e s . T h e y illu str a te w a y s o f
a d a p tin g th e m o d e l c la u s e s to s p e c ific
a c c o u n ts. T h e c la u s e s s h o w n r e la te o n ly to
th e s p e c ific tr a n sa c tio n s d e sc r ib e d .

B -l Model Clauses for Account
Disclosures
B -l(h) Disclosures Relating to Time
Accounts
1. Maturity. T h e d is c lo s u r e in C la u se (h)(i)
sta tin g a s p e c ific d a te m a y b e u s e d in a ll
c a s e s. T h e sta te m e n t d e sc r ib in g a tim e p e r io d
is a p p r o p r ia te o n ly w h e n p r o v id in g
d is c lo s u r e s in r e s p o n s e to a c o n s u m e r ’s
req u est.

B-2 Model Clauses for Change in Terms
1. General. T h e s e c o n d c la u s e , d e sc r ib in g
a fu tu re d e c r e a s e in th e in te r e st rate an d
a n n u a l p e r c e n ta g e y ie ld , a p p lie s to fixed -rate
a c c o u n ts o n ly .

B-4 Sample Form (Multiple Accounts)
1. Rate sheet insert. In th e rate sh e e t in sert,
th e c a lc u la t io n s o f th e a n n u a l p e r c e n ta g e
y ie ld for th e th r e e -m o n th a n d six -m o n th
c e r tific a te s are b a se d o n 9 2 d a y s a n d 181
d a y s r e s p e c t iv e ly . A ll c a lc u la tio n s in th e
in se r t a s s u m e d a ily c o m p o u n d in g .

B-6 Sample Form (Tiered-Bate Money
Market Account)
1. General. S a m p le F orm B - 6 u s e s T ie r in g
Appendix B to Part 230—Model Clauses

and Sample Forms
1. Modifications. In s titu tio n s that m o d ify
th e m o d e l c la u s e s w ill b e d e e m e d in

M e th o d A (d is c u s s e d in A p p e n d ix A a n d
C la u se (a )(iv )) to c a lc u la te in te r e st. It g iv e s a
n arra tiv e d e s c r ip tio n o f a tiered -r a te a cco u n t:
in s t itu t io n s m a y u s e d iffe r e n t form ats (for

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Federal Register / Vol. 59, No. 151 / Monday, August 8, 1994 / Rules and Regulations

e x a m p le , a chart sim ila r to th e o n e in S a m p le
F orm B— as lo n g a s a ll r e q u ired
4),
in fo r m a tio n for e a c h tie r is c le a r ly p r e se n te d .
T h e form d o e s n o t c o n ta in a se p a r a te
d is c lo s u r e o f th e m in im u m b a la n c e req u ired
to o b ta in th e a n n u a l p e r c e n ta g e y ie ld ; th e
tiered -r a te d is c lo s u r e p r o v id e s that
in fo r m a tio n .
B y ord er o f th e B oard o f G o v ern o rs o f th e
F ed eral R eserv e S y ste m , A u g u st 2 ,1 9 9 4 .

William W. Wiles,
Secretary of the Board.
[FR D o c. 9 4 - 1 9 2 2 4 F ile d 8 - 5 - 9 4 ; 8 :4 5 am)