The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Jan u ary 11, 1993
To All Depository Institutions in the Second
Federal Reserve District, and Others
Maintaining Sets of Board Regulations:
E nclosed is a copy of th e newly p rin te d R egulation D D pam phlet, 'T ru th in Savings,"
effective S eptem ber 21, 1992, o f the B oard o f G overnors of th e F e d e ra l R eserve System.
This pam phlet will replace th e previous printing of this regulation from th e
10578, dated O ctober 1, 1992.
Register th at was issued w ith our C ircular No.
C irculars Division
Federal
FEDERAL RESERVE BANK OF NEW YORK
B o a rd o f G o v e rn o rs o f th e F e d e ra l R eserv e System
Regulation DD
Truth in Savings
12 CFR 230; effective September 21, 1992
A n y inquiry relating to this regulation should be addressed to the D istrict in w hich the inquiry
arises.
N ovem b er 19 9 2
Contents
Page
Page
Section 2 3 0 .1 — A uthority, purpose,
coverage, and effect on state l a w s ...............1
( a ) A uthority ............................................... 1
( b ) P u r p o s e ....................................................1
( c ) C o v e r a g e ................................................. 1
( d ) Effect on state la w s ................................ 1
Section 2 3 0 .2 — D efinitions .............................. 1
Section 2 3 0 .3 — G eneral disclosure
req u irem en ts................................................... 2
( a ) F o r m ........................................................2
( b ) G e n e r a l................................................... 2
( c ) R elation to R egulation E .....................3
( d ) M ultiple c o n s u m e r s ..............................3
( e ) Oral response to in q u iries.....................3
( f ) R ounding and accuracy rules for
rates and y i e l d s ...................................... 3
Section 2 3 0 .4 — A ccou n t d is c lo su r e s.............. 3
( a ) D elivery o f account d isc lo su r e s..........3
(b ) C ontent o f account d is c lo s u r e s ..........3
( c ) N o tice to existing account holders . . 4
Section 2 3 0 .8 — A d v e r tisin g ..............................6
( a ) M isleading or inaccurate
a d v e r tise m e n ts...................................... 6
(b ) Perm issible r a te s .................................... 6
( c ) W hen additional disclosures are
re q u ir e d ................................................... 6
( d ) B o n u se s................................................... 7
( e ) E xem ption for certain
advertisem ents ...................................... 7
Section 2 3 0 .9 — E nforcem ent and record
r e te n t io n .......................................................... 7
Section 2 3 0 .5 — Subsequent d isclo su res..........4
(a ) C hange in t e r m s ....................................4
(b ) N o tice before m aturity for tim e
accounts longer than one m onth
that renew a u to m a tic a lly .....................5
( c ) N otice for tim e accounts one
m onth or less that renew
a u to m a tic a lly .........................................5
(d ) N o tice before m aturity for tim e
accounts longer than on e year
that do not renew autom atically . . . 5
Section 2 3 0 .6 — Periodic-statem ent
d isclo su res........................................................5
( a ) G eneral rule .. ........................................5
(b ) Special rule for average-dailybalance m e th o d ...................................... 6
Section 2 3 0 .7 — P aym ent o f in t e r e s t .............. 6
(a ) Perm issible m e th o d s............................. 6
(b ) C om pounding and crediting
policies ................................................... 6
( c ) D ate interest begins to a c c r u e ............6
( a ) A dm inistrative e n fo r c e m e n t.............. 7
( b ) C ivil lia b ility ...........................................7
( c ) R ecord r e te n tio n .................................... 7
A ppendix A — Annual-percentageyield c a lc u la tio n ............................................. 7
A ppendix B— M odel clauses and sam ple
f o r m s ...............................................................12
A ppendix C— Effect on state la w s .................19
A ppendix D — Issuance o f staff
interpretations ............................................. 19
T R U T H IN S A V IN G S A C T
Section
26 1 Short t i t l e ................................................21
2 6 2 Findings and p u r p o se ........................... 21
2 6 3 D isclosu re o f interest rates and
term s o f a c c o u n ts .................................. 21
2 6 4 A ccou n t s c h e d u le .................................. 2 2
2 6 5 D isclosures requirem ents for
certain a c c o u n t s .................................... 23
2 6 6 D istribution o f sc h e d u le s.....................23
267
268
269
270
27 1
272
273
274
Paym ent o f interest ..............................2 4
Periodic s t a t e m e n t s ..............................2 4
R e g u la tio n s.............................................2 4
A dm inistrative e n fo r c e m e n t.............. 25
C ivil lia b ility ........................................... 25
Credit u n i o n s .........................................2 7
Effect on state law ................................2 7
D e fin itio n s............................................... 2 7
i
Regulation DD
Truth in Savings
12 CFR 230; effective September 21, 1992; compliance optional until March 21, 1993
SECTION 230.1—Authority, Purpose,
Coverage, and Effect on State Laws
Authority.
(a )
T his regulation, know n as
R egulation D D , is issued by the Board o f
G overnors o f the Federal R eserve System to
im plem ent the Truth in Savings A ct o f 1991
(th e a c t), contained in the Federal D ep osit
Insurance C orporation Im provem ent A c t o f
1991 ( 1 2 U SC 4 3 0 1 et seq., Pub. L. 102-242,
105 Stat. 2 2 3 6 ) . Inform ation-collection re
quirem ents contained in this regulation have
been approved by the Office o f M anagem ent
and Budget under the provisions o f 4 4 U SC
3 5 0 1 et seq. and have been assigned O M B N o.
7100-0255.
Purpose.
(b )
T he purpose o f this regulation
is to enable consum ers to m ake inform ed d eci
sions about accounts at depository institu
tions. T he regulation requires depository
institutions to provide disclosures so that con
sum ers can m ake m eaningful com parisons
am ong depository institutions.
Coverage.
(c )
T his regulation applies to d e
pository institutions except for credit unions.
In addition, the advertising rules in section
2 3 0 .8 o f this part apply to any person w ho
advertises an account offered by a depository
institution, including deposit brokers.
Effect on state laws.
(d )
State law require
m ents that are inconsistent w ith the require
m ents o f the act and this regulation are
preem pted to the extent o f the inconsistency.
A dditional inform ation on inconsistent state
law s and the procedures for requesting a pre
em ption determ ination from the Board are set
forth in appendix C o f this part.
SECTION 230.2—Definitions
For purposes o f this regulation, the follow ing
definitions apply:
Account
(a )
m eans a deposit account at a
depository institution that is held by or of
fered to a consum er. It includes time, de
mand, savings, and negotiable order o f w ith
drawal accounts. F or purposes o f the
advertising requirem ents in section 2 3 0 .8 o f this
part, the term also includes an account at a
depository institution that is held by or on be
h a lf o f a deposit broker, if any interest in the
account is held by or offered to a consum er. The
term does not include an existing account held
by an unincorporated nonbusiness association
o f natural persons prior to M arch 21, 1993,
unless the association notifies the institution
that it m eets the definition o f “consum er.”
Advertisement
(b )
m eans a com m ercial m es
sage, appearing in any m edium , that prom otes
directly or indirectly the availability of, or a
deposit in, an account.
Annual percentage yield
(c )
m eans a percent
age rate reflecting the total am ount o f interest
paid on an account, based on the interest rate
and the frequency o f com pounding for a 365day period and calculated according to the
rules in appendix A o f this part.
Average-daily-balance method
(d )
m eans the
application o f a periodic rate to the average
daily balance in the account for the period.
T he average daily balance is determ ined by
adding the full am ount o f principal in the ac
count for each day o f the period and dividing
that figure by the num ber o f days in the
period.
Board
(e )
m eans the Board o f G overnors o f
the Federal R eserve System.
Bonus
(f)
m eans a prem ium , gift, award, or
other consideration w orth m ore than $ 1 0
(w h ether in the form o f cash, credit, m er
chandise, or any equivalent) given or offered
to a consum er during a year in exchange for
opening, m aintaining, renew ing, or increasing
an account balance. T h e term does not in
clude interest, other consideration w orth $ 1 0
or less given during a year, the w aiver or re
duction o f a fee, or the absorption o f expenses.
Business day
(g )
m eans a calendar day other
than a Saturday, a Sunday, or any o f the legal
public holidays specified in 5 U SC 6 1 0 3 ( a ) .
1
Regulation DD
§ 230.2
Consumer
(h )
m eans a natural person w ho
hold s an account prim arily for personal, fam i
ly, or household purposes, or to w hom such
an account is offered. T he term also includes
an unincorporated nonbusiness association o f
natural persons. T he term does not include a
natural person w ho holds an account for an
other in a professional capacity.
Daily-balance method
(i)
m eans the applica
tion o f a daily periodic rate to the full am ount
o f principal in the account each day.
Depository institution
institution
(j )
and
m ean
an institution defined in section 1 9 ( b ) ( 1 )
( A ) ( i ) - ( v i ) o f the Federal R eserve A c t ( 1 2
U S C 4 6 1 ) , except credit unions defined in sec
tion 1 9 ( b ) ( l ) ( A ) ( i v ) .
Deposit broker
(k )
m eans any person w h o is a
deposit broker as defined in section 2 9 ( g ) o f
the Federal D ep osit Insurance A ct ( 1 2 U SC
1 8 3 l f ( g ) ).
(l) Fixed-rate account
m eans an account for
w h ich the institution contracts to give at least
3 0 calendar days’ advance w ritten notice o f
decreases in the interest rate.
Grace period
(m )
m eans a period follow ing
the m aturity o f an autom atically renew ing
tim e account during w hich the consum er m ay
w ithdraw funds w ithout being assessed a
penalty.
Interest
(n )
m eans any paym ent to a con su m
er or to an account for the use o f funds in an
account, calculated by application o f a period
ic rate to the balance. T he term does not in
clude the paym ent o f a bonus or other con sid
eration w orth $ 1 0 or less given during a year,
the w aiver or reduction o f a fee, or the absorp
tion o f expenses.
Interest rate
(o )
m eans the annual rate o f in
terest paid on an account w hich does not re
flect com pounding. For the purposes o f the
account disclosures in section 2 3 0 . 4 ( b ) ( l ) ( i )
o f this part, the interest rate may, but need
not, be referred to as the “annual percentage
rate” in addition to being referred to as the
“interest rate.”
Passbook savings account
(p )
m eans a savings
accou n t in w hich the consum er retains a book
2
or other docum ent in w hich the institution
records transactions on the account.
Periodic statement
(q )
m eans a statem ent set
ting forth inform ation about an account (o th
er than a tim e account or passbook savings
a ccou n t) that is provided to a consum er on a
regular basis four or m ore tim es a year.
State
(r )
m eans a state, the D istrict o f C o
lum bia, the C om m onw ealth o f Puerto R ico,
and any territory or possession o f the U n ited
States.
Stepped-rate account
(s)
m eans an account
that has tw o or m ore interest rates that take
effect in succeeding periods and are know n
w hen the account is opened.
Tiered-rate account
(t)
m eans an account
that has tw o or m ore interest rates that are
applicable to specified balance levels.
Time account
(u )
m eans an account w ith a
m aturity o f at least seven days in w h ich the
consum er generally does not have a right to
m ake w ithdraw als for six days after the ac
count is opened, unless the deposit is subject
to an early w ithdraw al penalty o f at least sev
en days’ interest on am ount withdrawn.
Variable-rate account
(v )
m eans an account
in w hich the interest rate m ay change after
the account is opened, unless the institution
contracts to give at least 3 0 calendar d ays’ ad
vance w ritten notice o f rate decreases.
SECTION 230.3—General Disclosure
Requirements
Form.
(a )
D epository institutions shall m ake
the disclosures required by sections 2 3 0 .4
through 2 3 0 .6 o f this part, as applicable,
clearly and conspicuously in w riting and in a
form the consum er m ay keep. D isclosu res for
each account offered by an institution m ay be
presented separately or com bined w ith d isclo
sures for the institution’s other accounts, as
long as it is clear w hich disclosures are appli
cable to the consum er’s account.
General
(b )
T he disclosures shall reflect the
term s o f the legal obligation o f the account
agreem ent betw een the consum er and the de
pository institution. D isclosu res m ay be m ade
Regulation DD
in languages other than English, provided the
disclosures are available in E nglish upon
request.
Relation to Regulation E.
(c )
D isclosu res re
quired by and provided in accordance w ith
the E lectronic Fund Transfer A c t ( 1 5 U SC
1 6 0 1 ) and its im plem enting R egulation E
( 1 2 C F R 2 0 5 ) that are also required by this
regulation m ay be substituted for the d isclo
sures required by this regulation.
Multiple consumers.
(d )
If an account is held
by m ore than one consum er, disclosures m ay
be m ade to any one o f the consum ers.
Oral response to inquiries.
(e )
In an oral re
sponse to a consum er’s inquiry about interest
rates payable on its accounts, the depository
institution shall state the annual percentage
yield. T he interest rate m ay be stated in addi
tion to the annual percentage yield. N o other
rate m ay be stated.
( f ) Rounding and accuracy rules for rates and
yields.
( 1 ) R ounding. T he annual percentage
yield, the annual percentage yield earned,
and the interest rate shall be rounded to the
nearest one-hundredth o f one percentage
point ( . 0 1 % ) and expressed to tw o decim al
places. F or account disclosures, the interest
rate m ay be expressed to m ore than tw o
- decim al places.
( 2 ) A ccuracy. T he annual percentage yield
(an d the annual percentage yield earned)
w ill be considered accurate if not m ore that
one-tw entieth o f one percentage point
( . 0 5 % ) above or below the annual percent
age yield (an d the annual percentage yield
earned) determ ined in accordance w ith the
rules in appendix A o f this part.
SECTION 230.4— Account Disclosures
(a )
Delivery of account disclosures.
( 1 ) A ccou n t opening. A depository institu
tion shall provide account disclosures to a
consum er before an account is opened or a
service is provided, w hichever is earlier. A n
institution is deem ed to have provided a
service w hen a fee required to be disclosed
is assessed. I f the consum er is n ot present at
§ 230.4
the institution w hen the account is opened
or the service is provided and has n ot al
ready received the disclosures, the institu
tion shall m ail or deliver the disclosures no
later than 10 business days after the ac
count is opened or the service is provided,
w hichever is earlier.
( 2 ) R equests, ( i ) A depository shall pro
vide account disclosures to a consum er
upon request. I f the consum er is not pres
ent at the institution w hen a request is
made, the institution shall m ail or deliver
the disclosures w ithin a reasonable tim e
after it receives the request.
( ii ) In providing disclosures upon re
quest, the institution m ay—
( A ) specify an interest rate and annu
al percentage yield that were offered
w ithin the m ost recent seven calendar
days; state that the rate and yield are
accurate as o f an identified date; and
provide a telephone num ber consum ers
m ay call to obtain current rate
inform ation.
( B ) state the m aturity o f a tim e ac
count as a term rather than a date.
Content of account disclosures.
(b )
A ccou n t
disclosures shall include the follow ing, as
applicable:
( 1 ) R ate inform ation, ( i ) A nn u al percent
age yield and interest rate. T he “annual
percentage yield ” and the “interest rate,”
using those term s, and for fixed-rate ac
counts the period o f tim e the interest rate
w ill be in effect.
( ii ) Variable rates. F or variable-rate
accounts:
( A ) the fact that the interest rate and
annual percentage yield m ay change;
( B ) how
the
interest
rate
is
determined;
(C ) the frequency w ith w hich the in
terest rate m ay change; and
( D ) any lim itation on the am ount the
interest rate m ay change.
( 2 ) C om pounding and crediting, ( i ) F re
quency. T he frequency w ith w h ich inter
est is com pounded and credited.
( ii ) Effect o f closin g an account. I f con
sum ers w ill forfeit interest if they close
the account before accrued interest is
3
§ 230.4
credited, a statem ent that interest w ill
n ot be paid in such cases.
( 3 ) Balance inform ation, ( i ) M inim um balance requirem ents. A n y m inim um
balance required to—
( A ) open the account;
( B ) avoid the im position o f a fee; or
( C ) obtain the annual percentage
yield disclosed.
Except for the balance to open the ac
count, the disclosure shall state how the
balance is determ ined for these purposes.
( ii ) B alance-com putation m ethod. A n
explanation o f the balance-com putation
m ethod specified in section 2 3 0 .7 o f this
part used to calculate interest on the
account.
( iii) W hen interest begins to accrue. A
statem ent o f w hen interest begins to ac
crue on noncash deposits.
( 4 ) Fees. T he am ount o f any fee that m ay
be im posed in connection w ith the account
(o r an explanation o f h ow the fee w ill be
d eterm ined) and the conditions under
w h ich the fee m ay be im posed.
( 5 ) T ransaction lim itations. A n y lim ita
tions on the num ber or dollar am ount o f
w ithdraw als or deposits.
( 6 ) F eatures o f tim e accounts. F or tim e
accounts:
( i ) T im e requirements. T he m aturity
date.
( ii ) Early w ithdraw al penalties. A state
m ent that a penalty w ill or m ay be im
posed for early withdrawal, how it is cal
culated, and the conditions for its
assessm ent.
( iii) W ithdraw al o f interest prior to m a
turity. I f com pounding occurs during the
term and interest m ay be w ithdraw n pri
or to m aturity, a statem ent that the annu
al percentage yield assum es interest re
m ains on deposit until m aturity and that
a w ithdraw al w ill reduce earnings.
( iv ) R enew al policies. A statem ent o f
w hether or n ot the account w ill renew
autom atically at m aturity. If it w ill, a
statem ent o f w hether or not a grace peri
od w ill be provided and, if so, the length
o f that period m ust be stated. If the ac
count w ill not renew autom atically, a
statem ent o f w hether interest w ill be paid
4
Regulation DD
after m aturity if the consum er does n ot
renew the account m ust be stated.
( 7 ) Bonuses. T he am ount or type o f any
bonus, w hen the bonus w ill be provided,
and any m inim um balance and tim e re
quirem ents to obtain the bonus.
Notice to existing account holders.
(c )
( 1 ) N o tice o f availability o f disclosures.
D epository institutions shall provide a n o
tice to consum ers w ho receive periodic
statem ents and w ho hold existing accounts
o f the type offered by the institution on
M arch 2 1 , 1993. T he notice shall be in clu d
ed on or w ith the first periodic statem ent
sent on or after M arch 2 1 , 1 9 9 3 (o r on or
w ith the first periodic statem ent for a state
m ent cycle beginning on or after that d a te).
T he notice shall state that consum ers m ay
request account disclosures containing
term s, fees, and rate inform ation for their
account. In responding to such a request,
institutions shall provide disclosures in ac
cordance w ith paragraph ( a ) ( 2 ) o f this
section.
( 2 ) A lternative to notice. A s an alternative
to the notice described in paragraph ( c ) ( 1 )
o f this section, institutions m ay provide ac
count disclosures to consum ers. T he d isclo
sures m ay be provided either w ith a period
ic statem ent or separately, but m ust be sent
no later than w hen the periodic statem ent
described in paragraph ( c ) ( 1 ) is sent.
SECTION 230.5—Subsequent
Disclosures
Change in terms.
(a )
( 1 ) A dvance notice required. A depository
institution shall give advance notice to af
fected consum ers o f any change in a term
required to be disclosed under section
2 3 0 .4 ( b ) o f this part if the change m ay re
duce the annual percentage yield or ad
versely affect the consum er. T he notice
shall include the effective date o f the
change. T he notice shall be m ailed or deliv
ered at least 3 0 calendar days before the ef
fective date o f the change.
( 2 ) N o notice required. N o notice under
this section is required for—
( i ) Variable-rate changes. C hanges in
Regulation DD
the interest rate and corresponding
changes in the annual percentage yield in
variable-rate accounts.
( ii) Check-printing fees. C hanges in fees
assessed by third parties for check
printing.
( iii) Short-term tim e accounts. Changes
in any term for tim e accounts w ith m a
turities o f one m onth or less.
§ 230.6
w hen they w ill be determ ined, and a
telephone num ber the consum er m ay
call to obtain the interest rate and the
annual percentage yield that w ill be
paid for the new accou n t); and
(C ) any difference in the term s o f the
new account as com pared w ith the
term s required to be disclosed under
section 2 3 0 .4 ( b ) o f this part for the ex
isting account.
(b ) Notice before maturity for time accounts
( c ) Notice for time accounts one month or less
longer than one month that renew automati that
automatically. F or tim e accounts
cally. F or tim e accounts w ith a m aturity lo n g w ith renew
a m aturity one m onth or less that renew
er than one m onth that renew autom atically
at m aturity, institutions shall provide the d is
closures described below before m aturity. T he
disclosures shall be m ailed or delivered at
least 3 0 calendar days before m aturity o f the
existing account. A lternatively, the d isclo
sures m ay be m ailed or delivered at least 2 0
calendar days before the end o f the grace peri
od on the existing account, provided a grace
period o f at least five calendar days is allow ed.
( 1 ) M aturities o f longer than one year. I f
the m aturity is longer than one year, the
institution shall provide account disclosures
set forth in section 2 3 0 .4 ( b ) o f this part for
the new account, along w ith the date the
existing account matures. I f the interest
rate and annual percentage yield that w ill
be paid for the new account are unknow n
w hen disclosures are provided, the institu
tion shall state that those rates have n ot yet
been determ ined, the date w hen they w ill be
determ ined, and a telephone num ber co n
sum ers m ay call to obtain the interest rate
and the annual percentage yield that w ill be
paid for the new account.
( 2 ) M aturities o f one year or less but lon g
er than one m onth. I f the m aturity is one
year or less but longer than on e m onth, the
institution shall either—
( i ) provide disclosures as set forth in
paragraph ( b ) ( 1 ) o f this section; or
( i i ) disclose to the consum er—
( A ) the date the existing account m a
tures and th e new m aturity date if the
accou n t is renewed;
( B ) the interest rate and the annual
percentage yield for th e new account if
they are know n (o r that th ose rates
have not yet been determ ined, the date
autom atically at m aturity, institutions shall
d isclose any difference in the term s o f the new
account as com pared w ith the term s required
to be disclosed under section 2 3 0 .4 ( b ) o f this
part for the existing account, other than a
change in the interest rate and corresponding
change in the annual percentage yield. The
notice shall be m ailed or delivered w ithin a
reasonable tim e after the renewal.
( d ) Notice before maturity for time accounts
longer than one year that do not renew auto
matically. For tim e accounts w ith a m aturity
longer than one year that do n ot renew auto
m atically at m aturity, institutions shall dis
close to consum ers the m aturity date and
w hether interest w ill be paid after m aturity.
T he disclosures shall be m ailed or delivered at
least 10 calendar days before m aturity o f the
existing account.
SECTION 230.6—Periodic-Statement
Disclosures
General rule.
(a )
I f a depository institution
m ails or delivers a periodic statem ent, the
statem ent
shall
include
the
follow ing
disclosures:
( 1 ) A nnual percentage yield earned. The
“annual percentage yield earned” during
the statem ent period, using that term, cal
culated according to the rules in appendix
A o f this part.
( 2 ) A m ou n t o f interest. T he dollar am ount
o f interest earned during th e statem ent
period.
( 3 ) F ees im posed. F ees required to be dis
closed under section 2 3 0 . 4 ( b ) ( 4 ) o f this
part that w ere debited to the account dur5
Regulation DD
§ 230.6
ing the statem ent period. T he fees shall be
item ized by type and dollar am ounts.
( 4 ) L ength o f period. T he total num ber o f
days in the statem ent period, or the begin
ning and ending dates o f the period.
( b ) Special rule for average-daily-balance
method. In m aking the disclosures described
in paragraph ( a ) o f this section, institutions
that use the average-daily-balance m ethod
and that calculate interest for a period other
than the statem ent period shall calculate and
disclose the annual percentage yield earned
and am ount o f interest earned based on that
period rather than the statem ent period. The
inform ation in paragraph ( a ) ( 4 ) o f this sec
tion shall be stated for that period as w ell as
for the statem ent period.
SECTION 230.7—Payment of Interest
Permissible methods.
(a )
( 1 ) Balance on w hich interest is calcu lat
ed. Institutions shall calculate interest on
the full am ount o f principal in an account
for each day by use o f either the dailybalance m ethod or the average-dailybalance m eth od .1
( 2 ) D eterm ination o f m inim um balance to
earn interest. A n institution shall use the
sam e m ethod to determ ine any m inim um
balance to earn interest as it uses to deter
m ine the balance on w hich interest is calcu
lated. A n institution m ay use an additional
m ethod that is unequivocally beneficial to
the consum er.
Compounding and crediting policies.
(b )
T his
section does not require institutions to co m
pound or credit interest at any particular
frequency.
Date interest begins to accrue.
(c )
Interest
shall begin to accrue not later than the busi
ness day specified for interest-bearing ac
cou n ts in section 6 0 6 o f the Expedited Funds
A vailability A ct ( 1 2 U SC 4 0 0 5 et seq .) and
im plem enting R egulation CC ( 1 2 C F R 2 2 9 ) .
Interest shall accrue until the day funds are
withdraw n.
1 Institutions shall calculate interest by use of a daily rate
of at least y365 of the interest rate. In a leap year a daily
rate of y366 of the interest rate may be used.
6
SECTION 230.8—Advertising
Misleading or inaccurate advertisements.
(a )
A n advertisem ent shall n ot be m isleading or
inaccurate and shall n ot m isrepresent a d epos
itory institu tion ’s deposit contract. A n adver
tisem ent shall n ot refer to or describe an ac
cou n t as “free” or “no co st” (o r contain a
sim ilar term ) if any m aintenance or activity
fee m ay be im posed on the account. T h e w ord
“profit” shall n ot be used in referring to inter
est paid on an account.
Permissible rates.
(b )
I f an advertisem ent
states a rate o f return, it shall state th e rate as
an “annual percentage yield” using that term.
(T h e abbreviation “A P Y ” m ay be used pro
vided the term “annual percentage yield ” is
stated at least on ce in the advertisem ent.) T he
advertisem ent shall n ot state any other rate,
except that the “interest rate,” using that
term, m ay be stated in conjunction w ith, but
n ot m ore consp icu ou sly than, the annual per
centage yield to w h ich it relates.
When additional disclosures are required.
(c )
E xcept as provided in paragraph ( e ) o f this
section, if the annual percentage yield is stated
in an advertisem ent, the advertisem ent shall
state the follow in g inform ation, to the extent
applicable, clearly and conspicuously:
( 1 ) Variable rates. F or variable-rate ac
counts, a statem ent that the rate m ay
change after the accou n t is opened.
( 2 ) T im e annual percentage yield is o f
fered. T he period o f tim e the annual per
centage yield w ill be offered, or a statem ent
that the annual percentage yield is accurate
as o f a specified date.
( 3 ) M inim um balance. T he m inim um bal
ance required to obtain the advertised an
nual percentage yield. F or tiered-rate ac
counts, the m inim um balance required for
each tier shall be stated in close proxim ity
and w ith equal prom inence to the applica
ble annual percentage yield.
( 4 ) M inim um opening deposit. T h e m in i
m um deposit required to open th e account,
if it is greater than th e m inim um balance
necessary to obtain the advertised annual
percentage yield.
( 5 ) Effect o f fees. A statem ent that fees
Regulation DD
Appendix A
cou ld reduce the earnings on the account.
( 6 ) F eatures o f tim e accounts. F or tim e
accounts:
( i ) T im e requirem ents. T he term o f the
account.
( ii ) Early w ithdraw al penalties. A state
m ent that a penalty w ill or m ay be im
posed for early withdrawal.
Bonuses.
(d )
E xcept as provided in para
graph ( e ) o f this section, if a bonus is stated
in an advertisem ent, the advertisem ent shall
state the follow ing inform ation, to the extent
applicable, clearly and conspicuously:
( 1 ) the “annual percentage yield,” using
that term;
( 2 ) the tim e requirem ent to obtain the
bonus;
( 3 ) the m inim um balance required to ob
tain the bonus;
( 4 ) the m inim um balance required to open
the account, if it is greater than the m in i
m um balance necessary to obtain the bonus;
and
( 5 ) w hen the bonus w ill be provided.
Exemption for certain advertisements.
(e )
If
an advertisem ent is m ade through one o f the
follow ing media, it need n ot contain the infor
m ation in paragraphs ( c ) ( 1 ) , ( c ) ( 2 ) , ( c ) ( 4 ) ,
( c ) ( 5 ) , ( c ) ( 6 ) ( h ) , ( d ) ( 4 ) , and ( d ) ( 5 ) o f
this section:
( 1 ) broadcast or electronic media, such as
television or radio;
( 2 ) ou tdoor m edia, such as billboards;
( 3 ) telephone response machines; or
( 4 ) lobby boards inside a depository insti
tution or deposit broker (p rovided they
contain a notice advising consum ers to con
tact an em ployee for further inform ation).
SECTION 230.9—Enforcement and
Record Retention
Administrative enforcement.
(a )
Section 2 7 0
o f the act contains the provisions relating to
adm inistrative sanctions for failure to com ply
w ith the requirem ents o f the act and this regu
lation. C om pliance is enforced by the agencies
listed in that section.
(b )
Civil liability.
Section 2 7 1 o f the act co n
tains the provisions relating to civil liability
for failure to com ply w ith the requirem ents o f
the act and this regulation.
Record retention.
(c )
A depository institution
shall retain evidence o f com pliance w ith this
regulation for a m inim um o f tw o years after
the date disclosures are required to be m ade
or action is required to be taken. T h e adm inis
trative agencies responsible for enforcing the
regulation m ay require depository institutions
under their jurisdiction to retain records for a
longer period if necessary to carry out their
enforcem ent responsibilities under section 2 7 0
o f the act.
APPENDIX A—Annual-PercentageYield Calculation
T he annual percentage yield m easures the to
tal am ount o f interest paid on an account
based on the interest rate and the frequency o f
com p ou n d in g.1 T he annual percentage yield is
expressed as an annualized rate, based on a
365-day year.12 Part I o f this appendix d iscuss
es the annual percentage yield calculations for
account disclosures and advertisem ents, w hile
part II discusses annual-percentage-yieldearned calculations for periodic statem ents.
Part I. Annual Percentage Yield for
Account Disclosures and Advertising
Purposes.
In general, the annual percentage yield for ac
count disclosures under sections 2 3 0 .4 and
2 3 0 .5 and for advertising under section 2 3 0 .8
is an annualized rate that reflects the relation
ship betw een the am ount o f interest that
w ould be earned by the consum er for the term
o f the account and the am ount o f principal
used to calculate that interest. Special rules
apply to accounts w ith tiered and stepped in
terest rates.
1 The annual percentage yield reflects only interest and
does not include the value of any bonus (or other consider
ation worth $10 or less) that may be provided to the con
sumer to open, maintain, increase, or renew an account.
Interest or other earnings are not to be included in the
annual percentage yield if such amounts are determined by
circumstances that may or may not occur in the future.
2 Institutions may calculate the annual percentage yield
based on a 365-day or a 366-day year in a leap year.
7
Appendix A
Regulation DD
A. General Rules
T h e annual percentage yield shall be calcu lat
ed by the form ula show n below . Institutions
shall calculate the annual percentage yield
based on the actual num ber o f days in the
term o f the account. For accounts w ithout a
stated m aturity date (su ch as a typical savings
or transaction acco u n t), the calculation shall
be based on an assum ed term o f 3 6 5 days. In
determ ining the total interest figure to be used
in the form ula, institutions shall assum e that
all principal and interest rem ain on deposit for
the entire term and that no other transactions
(d ep osits
w ithdraw als) occur during the
term .3 F or tim e accounts that are offered in
m ultiples o f m onths, institutions m ay base the
num ber o f days on either the actual num ber o f
days during the applicable period, or the n u m
ber o f days that w ould occur for any actual
sequence o f that m any calendar m onths. I f in
stitutions ch oose to use the latter rule, they
m ust use the sam e num ber o f days to calculate
th e dollar am ount o f interest earned on the
account that is used in the annual percentage
or
yield form ula (w h ere “Interest” is divided by
“P rincipal” ).
T h e annual percentage yield is calculated
by use o f the follow ing general form ula
( “A P Y ” is used for convenience in the
fo r m u la s):
A P Y = 100
[ ( 1 + In terest/P rin cip a l)(36VD,ys in ,erm)
-
1
]
“P rincipal” is the am ount o f funds assum ed
to have been deposited at the beginning o f
the account.
“Interest” is the total dollar am ount o f in
terest earned on the principal for the term
o f the account.
“ D ays in term ” is the actual num ber o f
days in the term o f the account. W hen the
“days in term ” is 3 6 5 (th a t is, w here the
stated m aturity is 3 6 5 days or w here the
account does n ot have a stated m atu rity),
the annual percentage yield can be calculat
ed by use o f the follow ing sim ple formula:
3 This assumption shall not be used if an institution re
quires, as a condition of the account, that consumers with
draw interest during the term. In such a case, the interest
(and annual percentage yield calculation) shall reflect that
requirement.
8
A P Y = 1 0 0 (In terest/P rin cip al)
Examples:
( 1 ) I f an institution pays $ 6 1 .6 8 in interest
for a 365-day year on $ 1 ,0 0 0 deposited
into a N O W account, using the general
form ula above, the annual percentage
yield is 6 .1 7 percent:
A PY = 100
[ ( 1 + 6 1 .6 8 / 1 ,0 0 0 ) ( 3 6 5 / 3 6 5 )
___
JJ
A P Y = 6 .1 7 % .
Or, using the sim ple form ula above (sin ce,
as an account w ith ou t a stated term , the
term is deem ed to be 3 6 5 d ays):
A P Y = 1 0 0 ( 6 1 . 6 8 / 1 ,0 0 0 )
A P Y = 6 .1 7 %
( 2 ) I f an institution pays $ 3 0 .3 7 in interest
on a $ 1 ,0 0 0 six-m onth certificate o f d ep o
sit (w h ere the six-m onth period used by
the institution contains 18 2 d a y s), using
the general form ula above, the annual
percentage yield is 6 .1 8 percent:
A P Y = 100
[ ( 1 + 3 0 .3 7 / 1 ,0 0 0 ) ( 3 6 5 / 1 8 2 )
___
J J
A P Y = 6 .1 8 %
B. Stepped-Rate Accounts (Different rates
apply in succeeding periods.)
F or accou n ts w ith tw o or m ore interest rates
applied in succeeding periods (w h ere th e rates
are know n at the tim e the account is o p en ed ),
an institution shall assum e each interest rate is
in effect for th e length o f tim e provided for in
the deposit contract.
Examples:
( 1 ) I f an institution offers a $ 1 ,0 0 0 six-m onth
certificate o f deposit on w h ich it pays a 5
percent interest rate, com pounded daily,
for the first three m on th s (w h ic h contain
91 d a y s), and a 5.5 percent interest rate,
com pounded daily, for the next three
m onths (w h ic h contain 9 2 d a y s), th e to
tal interest for six m onths is $ 2 6 .6 8 and,
using the general form ula above, th e an
nual percentage yield is 5 .3 9 percent:
A P Y = 10 0
[ ( 1 + 2 6 .6 8 / 1 ,0 0 0 ) ( 3 6 5 / 1 8 3 )
A P Y = 5 .3 9 %
___
JJ
Appendix A
Regulation DD
( 2 ) I f an institution offers a $ 1 ,0 0 0 two-year
certificate o f deposit on w hich it pays a 6
percent interest rate, com pounded daily,
for the first year, and a 6.5 percent inter
est rate, com pounded daily, for the next
year, the total interest for tw o years is
$ 1 3 3 .1 3 , and, using the general form ula
above, the annual percentage yield is 6 .45
percent:
A P Y = 100
[ ( 1 + 1 3 3 .1 3 / 1 ,0 0 0 ) (365/730) _ 1]
A P Y = 6 .4 5 %
C. Variable-Rate Accounts
F or variable-rate accounts w ithout an intro
ductory prem ium or discounted rate, an insti
tution m ust base the calculation only on the
initial interest rate in effect w hen the account
is opened (o r ad vertised), and assum e that
this rate w ill n ot change during the year.
Variable-rate accounts w ith an introductory
prem ium (o r d iscou n t) rate m ust be calcu lat
ed like a stepped-rate account. Thus, an in sti
tution shall assum e that ( 1 ) the introductory
interest rate is in effect for the length o f tim e
provided for in the deposit contract; and ( 2 )
the variable interest rate that w ould have been
in effect w hen the account is opened or adver
tised (b u t for the introductory rate) is in ef
fect for the rem ainder o f the year. I f the vari
able rate is tied to an index, the index-based
rate in effect at the tim e o f disclosure m ust be
used for the rem ainder o f the year. If the rate
is not tied to an index, the rate in effect for
existing consum ers holding the sam e account
(w h o are not receiving the introductory inter
est rate) m ust be used for the rem ainder o f
the year.
F or exam ple, if an institution offers an ac
count on w hich it pays a 7 percent interest
rate, com pounded daily, for the first three
m onths (w h ich , for exam ple, contain 91
d a y s), w hile the variable interest rate that
w ould have been in effect w hen the account
was opened was 5 percent, the total interest
for a 365-day year for a $ 1 ,0 0 0 deposit is
$ 5 6 .5 2 (based on 91 days at 7 percent fol
low ed by 2 7 4 days at 5 p ercen t). U sin g the
sim ple form ula, the annual percentage yield is
5 .6 5 percent:
A P Y = 1 0 0 ( 5 6 . 5 2 / 1 ,0 0 0 )
A P Y = 5 .6 5 %
D. Tiered-Rate Accounts (Different rates
apply to specified balance levels.)
F or accounts in w hich tw o or m ore interest
rates paid on the account are applicable to
specified balance levels, the institution m ust
calculate the annual percentage yield in ac
cordance w ith the m ethod described below
that it uses to calculate interest. In all cases,
an annual percentage yield (o r a range o f an
nual percentage yields, if appropriate) m ust
be d isclosed for each balance tier.
F or purposes o f the exam ples discussed be
low , assum e the follow ing:
Interest
rate
5.25%
Deposit balance required to earn rate
up to but not ex ceed in g $2,500
5.50%
above $ 2 ,5 0 0 but n ot exceed in g $ 15,000
5.75%
above $15 ,0 0 0
Tiering Method A
U nd er this m ethod, an institution pays on the
full balance in the accou n t the stated interest
rate that corresponds to the applicable deposit
tier. For exam ple, if a consum er deposits
$ 8 ,0 0 0 , the institution pays the 5 .5 0 percent
interest rate on the entire $ 8 ,0 0 0 .
W hen this m ethod is used to determ ine in
terest, only one annual percentage yield w ill
apply to each tier. W ithin each tier, the annu
al percentage yield w ill not vary w ith the
am ount o f principal assum ed to have been
deposited.
For the interest rates and deposit balances
assum ed above, the institution w ill state three
annual percentage yields— one corresponding
to each balance tier. C alculation o f each annu
al percentage yield is sim ilar for this type o f
account as for accounts w ith a single interest
rate. Thus, the calculation is based on the to
tal am ount o f interest that w ould be received
by the consum er for each tier o f the account
for a year and the principal assum ed to have
been deposited to earn that am ount o f
interest.
First tier.
A ssu m in g daily com pounding, the
institution w ill pay $ 5 3 .9 0 in interest on a
$ 1 ,0 0 0 deposit. U sin g the general form ula, for
9
Appendix A
Regulation DD
the first tier, the annual percentage yield is
5 .3 9 percent:
A P Y = 10 0 [ ( 1 + 5 3 .9 0 / 1 ,0 0 0 ) <365/365> -
1]
A P Y = 5 .3 9 %
U sin g the sim ple formula:
A P Y = 1 0 0 ( 5 3 .9 0 / 1 , 0 0 0 )
A P Y = 5 .3 9 %
Second tier.
T he institution w ill pay $ 4 5 2 .2 9
in interest on a $ 8 ,0 0 0 deposit. Thus, using
the sim ple form ula, the annual percentage
yield for the second tier is 5 .65 percent:
A P Y = 1 0 0 ( 4 5 2 .2 9 / 8 , 0 0 0 )
A P Y = 5 .6 5 %
Third tier.
T he institution w ill pay $ 1 ,1 8 3 .6 1
in interest on a $ 2 0 ,0 0 0 deposit. Thus, using
the sim ple form ula, the annual percentage
yield for the third tier is 5 .9 2 percent:
A P Y = 1 0 0 ( 1 ,1 8 3 .6 1 / 2 0 , 0 0 0 )
A P Y = 5 .9 2 %
Tiering Method B
U nder this m ethod, an institution pays the
stated interest rate only on that portion o f the
balance w ithin the specified tier. F or exam ple,
if a consum er deposits $ 8 ,0 0 0 , the institution
pays 5 .25 percent on $ 2 ,5 0 0 and 5 .5 0 percent
on $ 5 ,5 0 0 (th e difference betw een $ 8 ,0 0 0 and
the first tier cut-off o f $ 2 ,5 0 0 ).
T he institution that com putes interest in
this m anner m ust provide a range that show s
the low est and the highest annual percentage
yields for each tier (other than for the first
tier, w hich, like the tiers in m ethod A , has the
sam e annual percentage yield th rou gh ou t).
T he low figure for an annual percentage yield
range is calculated based on the total am ount
o f interest earned for a year assum ing the
principal required to earn the inter
est rate for that tier. The high figure for an
annual percentage yield range is based on the
am ount o f interest the institution w ould pay
on the
principal that could be deposit
ed to earn that sam e interest rate. I f the ac
count does not have a lim it on the m axim um
am ount that can be deposited, the institution
m ay assum e any am ount.
F or the tiering structure assum ed above,
the institution w ould state a total o f five annu-
minimum
highest
10
al percentage yields— one figure for the first
tier and tw o figures stated as a range for the
other tw o tiers.
First tier.
A ssu m in g daily com pounding, the
institution w ould pay $ 5 3 .9 0 in interest on a
$ 1 ,0 0 0 deposit. F or this first tier, using the
sim ple form ula, the annual percentage yield is
5 .3 9 percent:
A P Y = 1 0 0 ( 5 3 .9 0 / 1 , 0 0 0 )
A P Y = 5 .3 9 %
Second tier. F or th e second tier, the institution
w ould pay betw een $ 1 3 4 .7 5 and $ 8 4 1 .4 5 in
interest, based on assum ed balances o f
$ 2 ,5 0 0 .0 1 and $ 1 5 ,0 0 0 , respectively. For
$ 2 ,5 0 0 .0 1 , interest w ould be figured on $ 2 ,5 0 0
at 5 .25 percent interest rate plus interest on $.01
at 5 .5 0 percent. F or the low end o f the second
tier, therefore, the annual percentage yield is
5 .3 9 percent, using the sim ple formula:
A P Y = 1 0 0 ( 1 3 4 .7 5 / 2 , 5 0 0 )
A P Y = 5 .3 9 %
F or $ 1 5 ,0 0 0 , interest is figured on $ 2 ,5 0 0 at
5 .2 5 percent interest rate plus interest on
$ 1 2 ,5 0 0 at 5 .5 0 percent interest rate. F or the
high end o f the second tier, the annual per
centage yield, using the sim ple form ula, is
5.61 percent:
A P Y = 1 0 0 ( 8 4 1 .4 5 / 1 5 ,0 0 0 )
A P Y = 5 .6 1 %
Thus, the annual percentage yield range for
the second tier is 5 .3 9 percent to 5.61 percent.
Third tier.
F or the third tier, the institution
w ould pay $ 8 4 1 .4 5 in interest on the low end
o f the third tier (a balance o f $ 1 5 ,0 0 0 .0 1 ) .
For $ 1 5 ,0 0 0 .0 1 , interest w ould be figured on
$ 2 ,5 0 0 at 5 .2 5 percent interest rate, plus inter
est on $ 1 2 ,5 0 0 at 5 .5 0 percent interest rate,
plus interest on $.01 at 5 .7 5 percent interest
rate. F or the low end o f the third tier, there
fore, the annual percentage yield (u sin g the
sim ple form ula) is 5.61 percent:
A P Y = 1 0 0 ( 8 4 1 .4 5 / 1 5 ,0 0 0 )
A P Y = 5 .6 1 %
Since the institution does not lim it the ac
count balance, it m ay assum e any m axim um
am ount for the purposes o f com puting the an
nual percentage yield for the high end o f the
Appendix A
Regulation DD
third tier. For an assum ed m axim um balance
am ount o f $ 1 0 0 ,0 0 0 , interest w ould be figured
on $ 2 ,5 0 0 at 5.2 5 percent interest rate, plus
interest on $ 1 2 ,5 0 0 at 5 .5 0 percent interest
rate, plus interest on $ 8 5 ,0 0 0 at 5 .7 5 percent
interest rate. F or the high end o f the third
tier, therefore, the annual percentage yield,
using the sim ple form ula, is 5 .8 7 percent:
A P Y = 1 0 0 (5 ,8 7 1 .7 9 / 1 0 0 ,0 0 0 )
A P Y = 5 .8 7 %
Thus, the annual percentage yield range that
w ould be stated for the third tier is 5.61 per
cent to 5 .8 7 percent.
If the assum ed m axim um balance am ount is
$ 1 ,0 0 0 ,0 0 0 instead o f $ 1 0 0 ,0 0 0 , the institution
w ould use $ 9 8 5 ,0 0 0 rather than $ 8 5 ,0 0 0 in the
last calculation. In that case, for the high end
o f the third tier the annual percentage yield,
using the sim ple form ula, is 5.91 percent:
A P Y = 1 0 0 (5 9 1 3 4 .2 2 / 1 ,0 0 0 ,0 0 0 )
A P Y = 5 .9 1 %
“B alance” is the average daily balance in
the account for the period.
“Interest earned” is the actual am ount o f
interest earned on the account for the
period.
“D ays in period” is the actual num ber o f
days for the period.
Examples:
( 1 ) A ssu m e an institution calculates interest
for the statem ent period (an d uses either
the daily-balance or the average-dailybalance m e th o d ), and the account has a
balance o f $ 1 ,5 0 0 for 15 days and a bal
ance o f $ 5 0 0 for the rem aining 15 days or
a 30-day statem ent period. T he average
daily balance for the period is $ 1 ,0 0 0 .
T he interest earned (u n d er either bal
ance-com putation m eth o d ) is $ 5 .2 5 dur
ing the period. T he annual percentage
yield earned (u sin g the form ula ab ove) is
6 .5 8 percent:
Thus, the annual percentage yield range that
w ould be stated for the third tier is 5.61 per
cent to 5.91 percent.
A P Y earned = 10 0
[1 + 5 . 2 5 / l , 0 0 0 ) (365/3O)
Part II. Annual Percentage Yield Earned
for Periodic Statements
A P Y earned = 6 .5 8 %
T he annual percentage yield earned for peri
odic statem ents under section 2 3 0 .6 ( a ) is an
annualized rate that reflects the relationship
betw een the am ount o f interest actually
earned on the consum er’s account during the
statem ent period and the average daily bal
ance in the account for the statem ent period.
Pursuant to section 2 3 0 .6 ( b ) , however, if an
institution uses the average-daily-balance
m ethod and calculates interest for a period
other than the statem ent period, the annual
percentage yield earned shall reflect the rela
tionship betw een the am ount o f interest
earned and the average daily balance in the
account for that other period.
The annual percentage yield earned shall be
calculated by using the follow ing form ula
( “A P Y earned” is used for convenience in the
form ulas):
A P Y earned = 10 0
[ 1 + Interest earn ed /
B a la n c e )(365/Days in p^ od) — 1]
-
1]
( 2 ) A ssu m e an institution calculates interest
on the average daily balance for the cal
endar m onth and provides periodic state
m ents that cover the period from the
16th o f one m onth to the 15 th o f the next
m onth. T he account has a balance o f
$ 2 ,0 0 0 Septem ber 1 through Septem ber
15 and a balance o f $ 1 ,0 0 0 for the re
m aining 15 days o f Septem ber. T he aver
age daily balance for the m onth o f Sep
tem ber is $ 1 ,5 0 0 , w h ich results in $ 6 .5 0
in interest earned for the m onth. T he an
nual percentage yield earned for the
m onth o f Septem ber w ould be show n on
the periodic statem ent covering Septem
ber 16 through O ctober 15. T he annual
percentage yield earned (u sin g the for
m ula above) is 5 .4 0 percent:
A P Y earned = 10 0
[1 + 6 . 5 0 / 1 , 5 0 0 )
-
( 3 6 5 /3 0 )
1]
A P Y earned = 5 .4 0 %
11
Appendix B
(3 )
Regulation DD
A ssu m e an institution calculates interest
on the average daily balance for a quarter
(fo r exam ple, the calendar m onths o f
Septem ber through N o v em b er), and pro
vides m onthly periodic statem ents cover
ing calendar m onths. T h e account has a
balance o f $ 1 ,0 0 0 throughout the 3 0 days
o f Septem ber, a balance o f $ 2 ,0 0 0
throughout the 31 days o f October, and a
balance o f $ 3 ,0 0 0 throughout the 3 0 days
o f N ovem ber. T he average daily balance
for the quarter is $ 2 ,0 0 0 , w hich results in
$2 1 in interest earned for the quarter.
T he annual percentage yield earned
w ould be show n on the periodic state
m ent for N ovem ber. T he annual percent
age yield earned (u sin g the form ula
ab ove) is 4 .2 8 percent:
A P Y earned = 100
[1
+
-
1
w ith an annual percentage yield o f ____
Y ou
w ill
be
paid
(time period) /u n t il
30 calendar d a y s].
%.
th is
rate
[for
(date)/for at least
( ii ) Variable-rate accounts
T h e interest rate o n your a ccou n t i s ____
w ith an annual percentage yield o f ____
%
%.
Y o u r interest rate and annual percen tage
y ield m ay change.
D eterm ination o f rate
T h e interest rate o n your acco u n t is based
on
(name of index)
m argin o f _______ ].
[p lu s /m in u s a
or
A t our d iscretion , w e m ay ch an ge the in ter
est rate on your account.
Frequency o f rate changes
21/ 2,000) (365/91)
W e m ay ch an ge the interest rate on you r
]
(time period)
a ccou n t [every
A P Y earned = 4 .2 8 %
/ a t any
t im e ] .
L im itations on rate changes
APPENDIX B—Model Clauses and
Sample Forms
The interest rate for your account will nev
er change by more than ____ % each
(time period)
B - l— M odel C lauses for A ccou n t D isclosu res
(§ 2 3 0 .4 (b ))
B-2— M odel C lauses for C hange in Term s
(§ 2 3 0 .5 (a ))
B-3— M odel C lauses for Pre-M aturity N otices
for T im e A ccou n ts ( § 2 3 0 . 5 ( b ) ( 2 ) and
2 3 0 .5 (d ))
B-4— Sam ple Form (M u ltip le A cco u n ts)
B-5— Sam ple Form (N O W A cco u n t)
B-6— Sam ple Form (Tiered-R ate M oney
M arket A c c o u n t)
B-7— Sam ple Form (Certificate o f D ep o sit)
B-8— Sam ple Form (C ertificate o f D ep osit
A d vertisem en t)
B-9— Sam ple F orm (M on ey M arket A ccou n t
A dvertisem en t)
.
T h e interest rate w ill never be [le ss /m o r e ]
t h a n ____ % .
or
T h e interest rate w ill n ever [ e x c e e d ____ %
a b o v e /d r o p m ore t h a n ____
% b elow ] the
interest rate in itially d isclosed to you.
( iii) Stepped-rate accounts
T h e initial interest rate for your accou n t is
__ % .
Y ou
w ill be paid th is rate
(time period)
/u n t il
(date)
].
[for
A fter
that tim e, the interest rate for you r accou n t
w ill b e ____ % , and yo u w ill be paid th is rate
[for
(time period)
/u n t il
(date) ]. T he
annual p ercentage yield for you r a ccou n t is
____ %.
( iv ) Tiered-rate accounts
B-l—Model Clauses for Account
Disclosures
(a )
(i)
Tiering M ethod A
• I f you r [d aily b a la n ce/a v era g e d aily b al
Rate information
a n ce] is $____ or m ore, the interest rate
paid on the entire balance in you r accou n t
Fixed-rate accounts
T h e interest rate on your acco u n t is
12
w ill b e ____
%
% w ith an annual percentage
yield o f ____ % .
Appendix B
Regulation DD
ance is calculated by adding the principal in
the account for each day o f the period and
dividing that figure by the number o f days
in the period.
• I f yo u r [d a ily b a la n ce/a v era g e daily bal
a n ce] is m ore than $____ , but less than
$____ , th e interest rate paid on the entire
balan ce in y ou r a ccou n t w ill be ____ %
w ith an annual p ercentage yield o f ____ % .
• I f your [d a ily b a la n ce/a v era g e daily bal
a n ce] is $____ or less, the interest rate paid
on the entire balance w ill b e ____
( iii) T o obtain the annual percentage yield
disclosed
% w ith
You must maintain a minimum balance of
$____ in the account each day to obtain
the disclosed annual percentage yield.
an annual p ercentage yield o f ____ %.
T ie r in g M e t h o d B
• A n interest rate o f ____ % w ill be paid o n ly
You must maintain a minimum average
daily balance o f $____ to obtain the dis
closed annual percentage yield. The aver
age daily balance is calculated by adding
the principal in the account for each day of
the period and dividing that figure by the
number of days in the period.
for that portion o f your [d a ily b a la n c e /a v
erage daily balan ce] that is greater than
$____ . T h e annual percentage yield for this
tier w ill range f r o m ____ % t o _____% , d e
pending on the balance in the accou n t.
• A n interest rate o f ____ % w ill be paid o n ly
for that p ortion o f yo u r [daily b a la n c e /a v
erage daily balan ce] that is greater than
$____ , but less than $_____. T h e annual
percentage yield for this tier w ill range
Balance-computation method
(d )
( i ) D aily-balance m ethod
f r o m ____ % t o _____ %, dep en d ing on the
W e use the daily-balance m ethod to calcu
late the interest on your account. This m eth
od applies a daily periodic rate to the princi
pal in the account each day.
balan ce in the account.
• I f yo u r [d a ily b a la n ce/a v era g e daily bal
an ce] is $____ or less, the interest rate paid
on the entire balance w ill b e ____
% w ith
( i i ) A verage-daily-balance m ethod
an annual p ercentage yield o f ____ % .
Compounding and crediting
(b )
(i)
We use the average-daily-balance method to
calculate interest on your account. This
method applies a periodic rate to the average
daily balance in the account for the period.
The average daily balance is calculated by
adding the principal in the account for each
day of the period and dividing that figure by
the number o f days in the period.
F requency
Interest w ill be com p o un d ed
b a sis/e v e r y
(time period)
[o n a _
].
Interest w ill be credited to your accou n t [o n a
__b a sis/e v e r y
( ii)
(time period)
).
E ffe c t o f c lo s in g a n a c c o u n t
(e )
I f y o u c lo se y o u r a ccou n t before interest is
credited, y o u w ill n o t receive th e accrued
interest.
(c )
Interest begins to accrue no later than the
business day we receive credit for the deposit
o f noncash items (for example, checks).
Minimum-balance requirements
(i)
or
T o o p en th e a c co u n t
Y ou
m ust
deposit
$____
to
op en
Interest begins to accrue on the business day
you deposit noncash items (for example,
checks)
this
accou n t.
(ii)
T o a v o id im p o s it io n o f f e e s
A m inim u m balance fee o f $____ w ill be
im posed every
(time period) if the bal
ance in the a ccou n t falls b elow $_______ any
d ay o f the
(time period) .
A m inim u m balance fee o f $____ w ill be
(time period) if the av
erage daily balance for the (time period)
im posed every
falls b elo w $____ . T h e average daily bal
Accrual of interest on noncash deposits
(f)
Fees
The following fees may be assessed against
your account:
________________
________________
________________
$ ____
$
____
$ ____
(conditions for imposing fee) $
% 0f
13
Appendix B
(g )
Regulation DD
Transaction limitations
m aturity o f th is accou n t to w ithdraw
funds w ith ou t penalty.
T h e m inim u m am ount y ou m ay [w ith d r a w /
w rite a ch eck for] is $____ .
( 2 ) N on -au tom atically renew able tim e
accounts
Y o u m ay m a k e ____ [d ep o sits in to /w ith d r a w -
{time period) .
als from ] y ou r a ccou n t each
(h )
T h is a ccou n t w ill n ot renew a u tom atical
Y o u m ay not m ake [depo sits in to /w ith d r a w -
ly at m aturity. I f you do n ot renew the
als from ]
accou n t, your d ep osit w ill be p laced in
y ou r accou n t until th e m aturity
date.
[an in terest-b earin g/a non -in terest-b ear
Disclosures relating to time accounts
in g] accou n t.
(i)
( 1 ) T im e requirem ents
Bonuses
Y ou
{date)
Y o u r acco u n t w ill m ature on
Y o u r a ccou n t w ill m ature in
.
w ithdraw
of
th e
p a id /r e c e iv e ]
[$ ____ /
] as a bon u s [w h en
{date)
Y o u m ust m aintain a m inim u m
].
[d a ily bal-
a n c e /a v e r a g e daily balance] o f $____ to obtain
the bonus.
im pose a p en alty if y ou
[a n y /a ll]
[be
y ou op en the a c c o u n t/o n
{time period) .
( ii ) Early w ithdraw al penalties
W e [w ill/m a y ]
w ill
{description o f item)
[deposited
T o earn th e b on u s, [$ ____ /y o u r en tire princi
fu n d s/p r in cip a l] before the m atu rity date.
T h e fee im posed w ill equal ____
pal]
d ays/
m ust
{time period)
rem ain
/u n til
on
d ep osit
{date)
[for
].
w e e k s [s ]/m o n th s [s ] o f interest.
or
W e [w ill/m a y ] im pose a p en a lty o f $___
if y ou w ithdraw [a n y /a ll] o f th e [deposited
fu n d s/p r in cip a l] before the m atu rity date.
I f y ou w ithd raw som e o f y o u r fun d s before
B-2—Model Clauses for Change in
Terms
On
{date)
, th e co st o f
{type of fee)
w ill
in crease to $____ .
{date)
m aturity, th e interest rate for th e rem aining
On
funds in yo u r account w ill b e _____% w ith
d ecrease t o ____ % w ith an annual p ercentage yield
o f ____ %.
an annual percentage yield o f _____%.
( iii) W ithdraw al o f interest prior to
m aturity
, the interst rate o n your accou n t w ill
On
{date) , th e m inim u m [d aily b a la n ce/a v erage daily b alan ce] required to avoid im p osition o f a
fee w ill increase to $
T h e annual percentage yield assu m es
interest w ill rem ain on d ep o sit u n til
m aturity. A w ithdraw al w ill red u ce
earnings.
( iv ) R enew al policies
( 1 ) A utom atically renew able tim e
accounts
B-3—Model Clauses for Pre-Maturity
Notices for Time Accounts
( a ) Automatically renewable time accounts
with maturities of one year or less but longer
than one month
{date)
.
T h is acco u n t w ill a u to m a tica lly renew at
Y o u r a ccou n t w ill m ature on
m aturity.
I f the a ccou n t renew s, th e n ew m aturity date w ill be
Y o u w ill ha v e [____ c a len d a r/b u sin ess]
{date)
.
days after the m aturity d a te to w ithdraw
fun d s w ith o u t penalty.
T h e interest rate for th e renew ed a ccou n t w ill be
__ % w ith an annual percentage yield o f _____%.
or
or
T here is n o grace period fo llo w in g the
T h e interest rate and annual percentage yield have
14
Regulation DD
Appendix B
n ot yet been d eterm ined. T h ey w ill be available on
{date)
{phone number
. Please call
)
to learn the interest rate and annual percent
age yield for your new account.
Non-automatically renewable time ac
counts with maturities longer than one year
(b )
Y o u r acco u n t w ill m ature on
{date)
.
I f yo u do n o t renew th e a ccou n t, interest [w ill/w ill
n ot] be paid after m aturity.
B-4— Sample Form (Multiple Accounts)
B A N K ABC
D IS C L O S U R E O F A C C O U N T T E R M S *•
This disclosure contains inform ation about
your:
X N O W A ccou n t
• Y our interest rate and annual percentage
yield m ay change. A t our discretion, we
m ay change the interest rate on your ac
count daily. T he interest rate for your ac
count w ill never be less than 2 .0 0 % .
• Interest begins to accrue on the business
day you deposit noncash item s (fo r exam
ple, ch eck s).
• Interest is com pounded daily and credited
on the last day o f each m onth. I f you close
your account before interest is credited, you
w ill n ot receive the accrued interest.
• W e use the daily-balance m ethod to calcu
late the interest on your account. T his
m ethod applies a daily periodic rate to the
principal in the account each day.
_ P assbook Savings A ccou n t
• T he interest rate on your account w ill be
paid for at least 3 0 days.
• Interest begins to accrue on the business
day you deposit noncash item s (fo r exam
ple, ch eck s).
• Interest is com pounded daily and credited
on the last day o f each m onth. I f you close
your account before interest is credited, you
w ill n ot receive the accrued interests.
• W e use the daily-balance m ethod to calcu
late the interest on your account. This
m ethod applies a daily periodic rate to the
principal in the account each day.
A dditional disclosures for your account are
included on the attached sheets.
_ M on ey M arket A ccou n t
• Y our interest rate and annual percentage
yield m ay change. A t our discretion, we
m ay change the interest rate on your ac
count daily. T he interest rate on your ac
count w ill never be less than 3 .0 0 %
• Y ou m ay m ake six ( 6 ) transfers from your
account, but only three ( 3 ) m ay be pay
m ents by check to third parties.
• Interest begins to accrue on the business
day you deposit noncash item s (fo r exam
ple, ch eck s).
• Interest is com pounded daily and credited
on the last day o f each m onth. I f you close
your account before interest is credited, you
w ill not receive the accrued interest.
• W e use the daily-balance m ethod to calcu
late the interest on your account. This
m ethod applies a daily periodic rate to the
principal in the account each day.
_ C ertificates o f D ep osit
• T h e interest rate for your account w ill be
paid until the m aturity date o f your certifi
cate ( ___________ ).
• Interest is com pounded daily and w ill be
credited to your account m onthly.
• Interest begins to accrue on the business
day you deposit noncash item s (fo r exam
ple, ch eck s).
• T his account w ill au tom atically renew at
m aturity. Y ou w ill have ten ( 1 0 ) calendar
days from the m aturity date to withdraw
your funds w ithout beng charged a penalty.
• A fter the account is opened, you m ay not
m ake deposits into or w ithdraw als from this
account until the m aturity date.
• W e use the daily-balance m ethod to calcu
late the interest on your account. This
m ethod applies a daily periodic rate to the
principal in the account each day.
• I f any o f the deposit is w ithdraw n before
the m aturity date, a penalty as show n below
w ill be imposed:
15
Regulation DD
Appendix B
Term
Early Withdrawal Penalty
3-m on th C D
6-m o n th C D
30 days interest
90 days interest
1-
year C D
120 d ays interest
2-
year C D
180 d ays interest
• Y ou m ay m ake three ( 3 ) w ithdraw als per
quarter.
Each subsequent w ith d r a w a l............. $ 2 .0 0
M oney M arket A ccou n t
A d d ition al disclosures for your account are
included on the attached sheets.
• M onthly m inim um -balance fee if the daily
balance drops below $ 1 ,0 0 0 any day o f
m o n t h .....................................................$ 5 .0 0
[Fee Schedule Insert]
Other A ccou n t Fees
B A N K ABC
FEE SC HEDULE
N O W A ccou n t
• M on th ly m inim um -balance fee if the daily
balance drops below $ 5 0 0 any day o f the
m o n t h .................................................... $ 7 .5 0
P assbook Savings A ccou n t
• M on th ly m inim um -balance fee if the daily
balance drops below $ 1 0 0 any day o f the
m o n t h .................................................... $ 6 .0 0
• D ep osited checks retu rn ed ..................$ 5 .0 0
• Balance inquiries (a t a branch or at an
A T M ) .....................................................$ 1 .00
• C heck p r in t in g * ..................(F e e depends on
style o f ch eck ordered)
• Y our ch eck returned for insufficient funds
(p er c h e c k ) * ...........................................$ 1 6 .0 0
• Stop-paym ent request (p er re q u e st)* $ 1 2 .5 0
• Certified ch eck (p er c h e c k ) * ............. $ 1 0 .0 0
* Fee does not apply to passbook savings ac
counts or certificates o f deposit.
A d d ition al disclosures for your account are
included on the attached sheet.
(Rate Sheet Insert)
B A N K A B C R A T E SH E E T
Account
Type
Minimum Deposit
to Open Account
Minimum Balance*
to Obtain Annual
Percentage Yield
Interest
Rate
Annual
Percentage
Yield
N O W ............................................................
$
500
$2,5 0 0
4.00%
P assb ook Savings ...................................
$
100
$
500
3.50%
4.08%
3.56%
M on ey M a r k e t..........................................
$ 1 ,0 0 0
$1,0 0 0
4.15%
4.24%
3 -M o n th C D ..................................
$ 1 ,0 0 0
$1,0 0 0
4.20%
4.29%
6 -M o n th C D .............................................
$ 1 ,0 0 0
$1,0 0 0
4.25%
4.34%
1-
Y ea r C D ...............................
$ 1 ,0 0 0
$1,000
5.20%
5.34%
2-
Y ear C D ...............................
$ 1 ,0 0 0
$1,0 0 0
5.80%
5.97%
♦D a ily balan ce (th e am ount o f principal in th e a cco u n t each d ay)
16
<
Regulation DD
Appendix B
B-5— Sample Form (N O W A ccount)
day you deposit noncash item s (fo r exam
ple, ch eck s).
BANK XYZ
D IS C L O S U R E O F IN T E R E S T , FEES,
A N D A C C O U N T TERM S
NOW ACCOUNT
F ee schedule
• M onthly m inim um -balance fee if the daily
balance drops below $ 1 ,0 0 0 any day o f the
m o n t h ......................................................$ 7 .0 0
• Fee to stop paym ent o f a c h e c k ..........$ 1 2 .5 0
• F ee for check returns (insufficient
funds— per c h e c k ) ................................$ 1 6 .0 0
• Certified check (p er c h e c k ) ................ $ 1 0 .0 0
• F ee for initial check printing
(p er 2 0 0 ) ................................................. $ 1 2 .0 0
(C o st for ch eck printing varies depending
on the style o f checks ordered.)
B-6—Sample Form (Tiered-Rate Money
Market Account)
B A N K ABC
D IS C L O S U R E O F IN T E R E S T , FEES,
A N D A C C O U N T TERM S
M ONEY M ARKET ACCOUNT
F ee schedule
• C heck returned for insufficient
funds (p er c h e c k ) .................................$ 1 6 .0 0
• Stop-paym ent request (p er request) .$ 1 2 .5 0
• Certified check (p er c h e c k ) ............... $ 1 0 .0 0
• C heck printing . . . (F e e depends on style o f
ch ecks ordered)
R ate inform ation
R ate inform ation
• T he interest rate for your account is
4 .0 0 % w ith an annual percentage yield o f
4 .0 8 % . Y our interest rate and annual
percentage yield m ay change. A t our discre
tion, w e m ay change the interest rate for
your account at any time. T he interest rate
for your account w ill never be less than 2 %
each year.
• W e use the daily-balance m ethod to calcu
late the interest on your account. T his
m ethod applies a daily periodic rate to the
principal in the account each day.
• If your daily balance is $ 1 5 ,0 0 0 or more,
the interest rate paid on the entire balance
in your account w ill be 5 .7 5 % w ith an an
nual percentage yield o f 5 .9 2 % .
• I f your daily balance is m ore than $ 2 ,5 0 0 ,
but less than $ 1 5 ,0 0 0 , the interest rate paid
on the entire balance in your accou n t w ill
be 5 .5 0 % w ith an annual percentage yield
o f 5 .6 5 % .
• I f your daily balance is $ 2 ,5 0 0 or less, the
interest rate paid on the entire balance w ill
be 5 .2 5 % w ith an annual percentage yield
o f 5 .3 9 % .
• Y our interest rate and annual percentage
yield m ay change. A t our discretion, we
m ay change the interest rate for your ac
count at any time. T he interest rate for your
account w ill never be less than 2 .0 0 % .
• Interest begins to accrue on the business
day you deposit noncash item s (fo r exam
ple, ch eck s).
C om pounding and crediting
• Interest is com pounded daily and credited
on the last day o f each m onth.
M inim um -balance requirem ents
• Y ou m ust
account.
deposit
$500
to
open
this
• Y ou m ust m aintain a m inim um balance o f
$ 2 ,5 0 0 in the accou n t each day to obtain the
annual percentage yield listed above.
B alance-com putation m ethod
• Interest for your account w ill be com
pounded daily and credited to your account
on the last day o f each m onth.
A ccru al o f interest on deposits other than
cash •
• Interest begins to accrue on the business
M inim um -balance requirem ents
• Y o u m ust deposit
account.
• A m inim um balance
posed every m onth
account falls below
m onth.
$ 1 ,0 0 0
to open this
fee o f $ 5 .0 0 w ill be im
if the balance in your
$ 1 ,0 0 0 any day o f the
17
Regulation DD
Appendix B
B alance-com putation m ethod
Early w ithdraw al penalty
• W e use the daily-balance m ethod to calcu
late the interest on your account. T his
m ethod applies a daily periodic rate to the
principal in the account each day.
• I f you w ithdraw any principal before the m a
turity date, a penalty equal to three m on th s’
interest w ill be charged to your account.
Transaction lim itations
• Y ou m ay m ake six ( 6 ) transfers from your
account, but only three ( 3 ) m ay be pay
m ents by check to third parties.
B-7—Sample Form (Certificate of
Deposit)
X Y Z S A V IN G S B A N K
1-Y E A R C E R T IF IC A T E O F D E P O S IT
R ate inform ation
R enew al policy
• T his account w ill be autom atically renew ed
at m aturity. Y ou have a grace period o f ten
( 1 0 ) calendar days after the m aturity date
to w ithdraw the funds w ithout being
charged a penalty.
B-8—Sample Form (Certificate of
Deposit Advertisement)
BAN K XYZ
A lw ays Offers Y ou C om petitive C D Rates!!
• T he interest rate for your account is 5.20%
w ith an annual percentage yield o f 5.34% .
Y ou w ill be paid this rate until the m aturity
date o f the certificate. Y our certificate w ill
m ature on September 30, 1993. T he annual
percentage yield assum es interest rem ains
on deposit until maturity. A w ithdraw al
w ill reduce earnings.
• Interest for your account w ill be co m
pounded daily and credited to your account
on the last day o f each m onth.
• Interest begins to accrue on the business
day you deposit any noncash item (fo r ex
am ple, ch eck s).
CERTIFICATES
OF DEPOSIT
ANNUAL
PERCENTAGE
YIELD (APY)
5 Year
4 Year
3 Year
2 Year
1Year
6 Month
90 Day
6.31%
6.07%
5.72%
5.52%
4.54%
4.34%
4.21%
M inim um -balance requirem ents
A pen alty m ay be im posed for early w ithdraw al.
A P Y s are offered on a ccou n ts opened from 5 / 9 / 9 3
through 5 /1 8 /9 3 .
T h e m inim u m balan ce to open an accou n t and
obtain the A P Y is $1,000.
• Y ou m ust deposit $ 1 ,0 0 0 to open this
account.
• Y ou m ust m aintain a m inim um balance o f
$ 1 ,0 0 0 in your account every day to obtain
the annual percentage yield listed above.
B alance-com putation m ethod
• W e use the daily-balance m ethod to calcu
late the interest on your account. T his
m ethod applies a daily periodic rate to the
principal in the account each day.
T ransaction lim itations
• A fter the account is opened, you m ay not
m ake deposits into or w ithdraw als from the
account until the m aturity date.
18
F or m ore inform ation call:
202-123-1234
Regulation DD
Appendix C
B-9—Sample Form (Money Market
Account Advertisement)
B A N K XYZ
A lw ays Offers Y ou C om petitive Rates!!
M ONEY
ANNUAL
M ARKET
PERCENTAGE
ACCOUNTS
Y IE L D (A P Y )
A ccou n ts w ith a balance
o f $ 5 ,0 0 0 or less
5 .0 7 % *
A ccou n ts w ith a balance
over $ 5 ,0 0 0
5 .5 7 % *
A P Y s are accurate as o f A p ril 30, 1993.
* T h e rates m ay ch an ge after the a cco u n t is opened.
F ees cou ld reduce th e earnings on the account.
F or m ore inform ation call:
202-123-1234
APPENDIX C—Effect on State Laws
Inconsistent requirements.
(a )
State law re
quirem ents that are inconsistent w ith the re
quirem ents o f the act and this regulation are
preem pted to the extent o f the inconsistency.
A state law is inconsistent if it requires a de
pository institution to m ake disclosures or
take actions that contradict the requirem ents
o f the federal law. A state law is also contra
dictory if it requires the use o f the sam e term
to represent a different am ount or a different
m eaning than the federal law, requires the use
o f a term different from that required in the
federal law to describe the sam e item, or per
m its a m ethod o f calculating interest on an
account different from that required in the
federal law.
Preemption determinations.
(b )
A deposito
ry institution, state, or other interested party
m ay request the Board to determ ine w hether a
state law requirem ent is inconsistent w ith the
federal requirem ents. A request for a determ i
nation shall be in w riting and addressed to the
Secretary, Board o f G overnors o f the Federal
R eserve System , W ashington, D C 2 0 5 5 1 . N o
tice that the Board intends to m ake a determ i
nation (eith er on request or on its ow n m o
tio n ) w ill be published in the
w ith an opportunity for public com m ent un
less the Board finds that notice and opportuni
ty for com m ent w ould be im practicable, un
necessary, or contrary to the public interest
and publishes its reasons for such decision.
N o tice o f a final determ ination w ill be pub
lished in the
and furnished to
the party w ho m ade the request and to the
appropriate state official.
Federal Register,
Federal Register
Effect of preemption determinations.
(c )
A f
ter the Board determ ines that a state law is
inconsistent, a depository institution m ay not
m ake disclosures using the inconsistent term
or take actions relying on the in consistent law.
Reversal of determination.
(d )
T he Board
reserves the right to reverse a determ ination
for any reason bearing on the coverage or ef
fect o f state or federal law. N o tic e o f reversal
o f a determ ination w ill be published in the
and a cop y furnished to the
appropriate state official.
Federal Register
APPENDIX D—Issuance of Staff
Interpretations
Officials in the B oard’s D ivision o f C onsum er
and C om m unity Affairs are authorized to is
sue official staff interpretations o f this regula
tion. T hese interpretations provide the protec
tions afforded under section 2 7 1 ( f ) o f the act.
E xcept in unusual circum stances, interpreta
tions w ill not be issued separately but w ill be
incorporated in an official com m entary to the
regulation, w hich w ill be am ended periodical
ly. N o staff interpretations w ill be issued ap
proving depository in stitu tion s’ forms, state
m ents, or calculation tools or m ethods.
19
Truth in Savings Act
12 U S C 4301 et seq.; 105 Stat. 2334; Publ. L. 102-242, title II, su b title F (D ecem b er 19, 1991)
Section
2 61 Short title
2 6 2 Findings and purpose
2 6 3 D isclosu re o f interest rates and term s o f
accounts
2 6 4 A ccou n t schedule
2 6 5 D isclosu re requirem ents for certain
accounts
2 6 6 D istribution schedule
2 6 7 Paym ent o f interest
2 6 8 Periodic statem ents
2 6 9 R egulations
2 7 0 A dm inistrative enforcem ent
271 C ivil liability
2 7 2 Credit unions
2 7 3 Effect on state law
2 7 4 D efinitions
SECTION 261—Short Title
This subtitle m ay be cited as the “Truth in
Savings A c t” .
[12 USC 4301 note.]
SECTION 262—Findings and Purpose
Findings.
(a )
T he C ongress hereby finds that
econom ic stability w ould be enhanced, co m
petition betw een depository institutions w ould
be im proved, and the ability o f the consum er
to m ake inform ed decisions regarding deposit
accounts, and to verify accounts, w ould be
strengthened if there was uniform ity in the
disclosure o f term s and conditions on w hich
interest is paid and fees are assessed in con
nection w ith such accounts.
(b ) Purpose. It is the purpose o f this subtitle
to require the clear and uniform disclosure
o f—
( 1 ) the rates o f interest w hich are payable
on deposit accounts by depository institu
tions; and
( 2 ) the fees that are assessable against de
posit accounts, so that consum ers can m ake
a m eaningful com parison betw een the co m
peting claim s o f depository institutions w ith
regard to deposit accounts.
[12 USC 4301.]
SECTION 263—Disclosure of Interest
Rates and Terms of Accounts
In general.
(a )
E xcept as provided in subsec
tions ( b ) and ( c ) , each advertisem ent, an
nouncem ent, or solicitation initiated by any
depository institution or deposit broker relat
ing to any dem and or interest-bearing account
offered by an insured depository institution
w hich includes any reference to a specific rate
o f interest payable on am ounts deposited in
such account, or to a specific yield or rate o f
earnings on am ounts so deposited, shall state
the follow in g inform ation, to the extent appli
cable, in a clear and conspicuous manner:
( 1 ) T he annual percentage yield.
( 2 ) T he period during w h ich such annual
percentage yield is in effect.
( 3 ) A ll m inim um account balance and
tim e requirem ents w hich m ust be m et in or
der to earn the advertised yield (and, in the
case o f accounts for w h ich m ore than 1
yield is stated, each annual percentage yield
and the account m inim um balance require
m ent associated w ith each such yield shall
be in close proxim ity and have equal
prom in en ce).
( 4 ) T he m inim um am ount o f the initial de
posit w hich is required to open the account
in order to obtain the yield advertised, if
such m inim um am ount is greater than the
m inim um balance necessary to earn the ad
vertised yield.
( 5 ) A statem ent that regular fees or other
conditions could reduce the yield.
( 6 ) A statem ent that an interest penalty is
required for early withdrawal.
( b ) Disclosure
required for on-premises
displays.
( 1 ) T he disclosure requirem ents contained
in this section shall not apply to any sign
(in clu d in g a rate board) d isclosing a rate or
21
§263
rates o f interest w hich is displayed on the
prem ises o f the depository institution if
such sign contains—
( A ) the accom panying annual percent
age yield; and
( B ) a statem ent that the consum er
should request further inform ation from
an em ployee o f the depository institution
concerning the fees and term s applicable
to the advertised account.
( 2 ) For purposes o f paragraph ( 1 ) , a sign
shall only be considered to be displayed on
the prem ises o f a depository institution if
the sign is designed to be view ed only from
the interior o f the prem ises o f the deposito
ry institution.
Broadcast and electronic media and out
door advertising exception. T he Board may, by
(c )
regulation, exem pt advertisem ents, announce
m ents, or solicitations m ade by any broadcast
or electronic m edium or ou tdoor advertising
display not on the prem ises o f the depository
institution from any disclosure requirem ents
described in paragraph ( 4 ) or ( 5 ) o f subsec
tion ( a ) if the Board finds that any such dis
closure w ould be unnecessarily burdensom e.
( d ) Misleading descriptions of free or no-cost
accounts prohibited. N o advertisem ent, an
nouncem ent, or solicitation m ade by any de
pository institution or deposit broker m ay refer
to or describe an account as a free or no-cost
account (o r w ords o f sim ilar m ean in g) if—
( 1 ) in order to avoid fees or service
charges for any period—
( A ) a m inim um balance m ust be m ain
tained in the account during such period;
or
( B ) the num ber o f transactions during
such period m ay not exceed a m axim um
number; or
( 2 ) any regular service or transaction fee is
im posed.
( d ) Misleading or inaccurate advertisements,
etc., prohibited. N o depository institution or
deposit broker shall m ake any advertisem ent,
announcem ent, or solicitation relating to a de
posit account that is inaccurate or m isleading
or that m isrepresents its deposit contracts.
[12 USC 4302. As amended by act of Oct. 28, 1992
(§ 957).]
22
Truth in Savings Act
S E C T I O N 2 6 4 — A c c o u n t S c h e d u le
In general.
(a )
Each depository institution
shall m aintain a schedule o f fees, charges, in
terest rates, and term s and conditions applica
ble to each class o f accounts offered by the
depository institution, in accordance w ith the
requirem ents o f this section and regulations
w hich the Board shall prescribe. T he Board
shall specify, in regulations, w hich fees,
charges, penalties, terms, conditions, and ac
count restrictions m ust be included in a
schedule required under this subsection. A de
pository institution need not include in such
schedule any inform ation not specified in such
regulation.
Information on fees and charges.
(b )
The
schedule required under subsection ( a ) w ith
respect to any account shall contain the fo l
low ing information:
( 1 ) A description o f all fees, periodic serv
ice charges, and penalties w hich m ay be
charged or assessed against the account (o r
against the account holder in connection
w ith such a cco u n t), the am ount o f any
such fees, charge, or penalty (o r the m eth
od by w hich such am ount w ill be calcu lat
e d ), and the conditions under w hich any
such am ount w ill be assessed.
( 2 ) A ll m inim um balance requirem ents
that affect fees, charges, and penalties, in
cluding a clear description o f how each
such m inim um balance is calculated.
( 3 ) A n y m inim um am ount required w ith
respect to the initial deposit in order to
open the account.
Information on interest rates.
(c )
T he sched
ule required under subsection ( a ) w ith respect
to any account shall include the follow ing
information:
( 1 ) A n y annual percentage yield.
( 2 ) T he period during w hich any such an
nual percentage yield w ill be in effect.
( 3 ) A n y annual rate o f sim ple interest.
( 4 ) T he frequency w ith w hich interest w ill
be com pounded and credited.
( 5 ) A clear description o f the m ethod used
to determ ine the balance on w hich interest
is paid.
( 6 ) T he inform ation described in para
graphs ( 1 ) through ( 4 ) w ith respect to any
Truth in Savings Act
period after the end o f the period referred
to in paragraph ( 2 ) (o r the m ethod for
com puting any inform ation described in
any such paragraph), if applicable.
( 7 ) A n y m inim um balance w hich m ust be
m aintained to earn the rates and obtain the
yields disclosed pursuant to this subsection
and a clear description o f how any such
m inim um balance is calculated.
( 8 ) A clear description o f any m inim um
tim e requirem ent w hich m ust be m et in or
der to obtain the yields disclosed pursuant
to this subsection and any inform ation de
scribed in paragraph ( 1 ) , ( 2 ) , ( 3 ) , or ( 4 )
that w ill apply if any tim e requirem ent is
not met.
( 9 ) A statem ent, if applicable, that any in
terest w hich has accrued but has not been
credited to an account at the tim e o f a w ith
drawal from the account w ill not be paid by
the depository institution or credited to the
account by reason o f such withdrawal.
( 1 0 ) A n y provision or requirem ent relat
ing to the nonpaym ent o f interest, including
any charge or penalty for early w ithdraw al,
and the cond ition s under w hich any such
charge or penalty m ay be assessed.
Other information.
(d )
The schedule required
under subsection ( a ) shall include such other
disclosures as the Board m ay determ ine to be
necessary to allow consum ers to understand
and com pare accounts, including frequency o f
interest rate adjustments, account restrictions,
and renew al policies for tim e accounts.
§26 6
( 1 ) accounts w ith respect to w h ich deter
m ination o f annual percentage yield is
based on an annual rate o f interest that is
guaranteed for a period o f less than 1 year;
( 2 ) variable rate accounts;
( 3 ) accounts w hich, pursuant to law, do
not guarantee paym ent o f a stated rate;
( 4 ) m ultiple rate accounts; and
( 5 ) accounts w ith respect to w h ich deter
m ination o f annual percentage yield is
based on an annual rate o f interest that is
guaranteed for a stated term.
[12 USC 4304.]
SECTION 266—Distribution of
Schedules
In general.
(a )
A schedule required under
section 2 6 4 for an appropriate account shall
be—
( 1 ) m ade available to any person upon
request;
( 2 ) provided to any potential custom er be
fore an account is opened or a service is
rendered; and
( 3 ) provided to the depositor, in the case
o f any tim e deposit w h ich is renew able at
m aturity w ithout notice from the depositor,
at least 3 0 days before the date o f maturity.
( b ) Distribution in case of certain initial de
posits. I f—
SECTION 265—Disclosure
Requirements for Certain Accounts
( 1 ) a depositor is not p hysically present at
an office o f a depository institution at the
tim e an initial deposit is accepted w ith re
spect to an account established by or for
such person; and
( 2 ) the schedule required under section
2 6 4 ( a ) has not been furnished previously to
such depositor,
the depository institution shall m ail the sched
ule to the depositor at the address show n on
the records o f the depository institution for
such account no later than 10 days after the
date o f the initial deposit.
The Board shall require, in regulations w hich
the Board shall prescribe, such m odification
in the disclosure requirem ents under this A ct
relating to annual percentage yield as m ay be
necessary to carry out the purposes o f this A ct
in the case o f—
(c )
If—
( 1 ) any change is m ade in any term or
condition w h ich is required to be disclosed
in the schedule required under section
2 6 4 ( a ) w ith respect to any account; and
Style and format.
(e )
Schedules required u n
der subsection ( a ) shall be w ritten in clear
and plain language and be presented in a for
m at designed to allow consum ers to readily
understand the term s o f the accounts offered.
[12 USC 4303.]
Distribution of notice of certain changes.
23
Truth in Savings Act
§ 266
(2 )
the change m ay reduce the yield or adest on accounts that are subject to this A c t
shall begin to accrue not later than the busi
versely affect any holder o f the account,
ness day specified for interest-bearing ac
all account holders w ho m ay be affected by
counts in section 6 0 6 o f the Expedited Funds
such change shall be notified and provided
A vailability A ct, subject to subsections ( b )
w ith a description o f the change by m ail at
and ( c ) o f such section.
least 3 0 days before the change takes effect.
( d ) Distribution in case of accounts estab
lished by more than 1 individual or by a group.
I f an account is established by m ore than 1
individual or for a person other than an indi
vidual, any distribution described in this sec
tion w ith respect to such account m eets the
requirem ents o f this section if the distribution
is m ade to 1 o f the individuals w h o established
the account or 1 individual representative o f
the person on w hose beh alf such account was
established.
( e ) Notice to account holders as of the effec
tive date of regulations. F or any account for
w h ich the depository institution delivers an
account statem ent on a quarterly or m ore fre
quent basis, the depository institution shall in
clude on or w ith any regularly scheduled
m ailing posted or delivered w ithin 1 8 0 days
after publication o f regulations issued by the
Board in final form, a statem ent that the ac
count holder has the right to request an ac
count schedule containing the term s, charges,
and interest rates o f the account, and that the
account holder m ay w ish to request such an
account schedule.
[12 USC 4305.]
SECTION 267—Payment of Interest
Calculated on full amount of principal.
(a )
Interest on an interest-bearing account at any
depository institution shall be calculated by
such institution on the full am ount o f princi
pal in the account for each day o f the stated
calculation period at the rate or rates o f inter
est disclosed pursuant to this A ct.
( b ) No particular method of compounding in
terest required. Subsection ( a ) shall not be
construed as prohibiting or requiring the use
o f any particular m ethod o f com pounding or
crediting o f interest.
(c )
Date by which interest must accrue.
24
Inter-
[12 USC 4306.]
SECTION 268—Periodic Statements
Each depository institution shall include on or
w ith each periodic statem ent provided to each
account holder at such institution a clear and
conspicuous disclosure o f the follow in g infor
m ation w ith respect to such account:
( 1 ) T he annual percentage yield earned.
( 2 ) T he am ount o f interest earned.
( 3 ) T he am ount o f any fees or charges
im posed.
( 4 ) T he num ber o f days in the reporting
period.
[12 USC 4307.]
SECTION 269—Regulations
In general.
(a )
( 1 ) Before the end o f the 9-m onth period
beginning on the date o f the enactm ent o f
this A ct, the Board, after consultation w ith
each agency referred to in section 2 7 0 ( a )
and public notice and opportunity for co m
m ent, shall prescribe regulations to carry
out the purpose and provisions o f this A ct.
( 2 ) T he regulations prescribed under para
graph ( 1 ) shall take effect not later than 9
m onths after publication in final form.
( 3 ) T he regulations prescribed under para
graph ( 1 ) m ay contain such classifications,
differentiations, or other provisions, and
m ay provide for such adjustm ents and ex
ceptions for any class o f accounts as, in the
judgm ent o f the Board, are necessary or
proper to carry out the purposes o f this
A ct, to prevent circum vention or evasion o f
the requirem ents o f this A ct, or to facilitate
com pliance w ith the requirem ents o f this
A ct.
( 4 ) T he provisions o f this A c t shall not ap
ply w ith respect to any depository institu
Truth in Savings Act
tion before the effective date o f regulations
prescribed by the Board under this subsec
tion (o r by the N ational Credit U n ion A d
m inistration Board under section 1 2 (b ) , in
the case o f any depository institution de
scribed
in
clause
( iv )
of
section
1 9 ( b ) ( 1 ) ( A ) o f the Federal R eserve A c t).
Model forms and clauses.
(b )
( 1 ) T he Board shall publish m odel form s
and clauses for com m on disclosures to facil
itate com pliance w ith this A ct. In devising
such form s, the Board shall consider the
use by depository institutions o f data pro
cessing or sim ilar autom ated m achines.
( 2 ) N oth in g in this A ct m ay be construed
to require a depository institution to use
any such m odel form or clause prescribed
by the Board under this subsection. A de
pository institution shall be deem ed to be in
com pliance w ith the disclosure provisions
o f this A ct if the depository institution—
( A ) uses any appropriate m odel form or
clause as published by the Board; or
( B ) uses any such m odel form or clause
and changes it by—
( i ) deleting any inform ation w hich is
not required by this Act; or
( ii ) rearranging the form at,
if in m aking such deletion or rearranging
the form at, the depository institution
does n ot affect the substance, clarity, or
m eaningful sequence o f the disclosure.
( 3 ) M od el disclosure form s and clauses
shall be adopted by the Board after duly
given notice in the Federal R egister and an
opportunity for public com m ent in accord
ance w ith section 5 5 3 o f title 5, U nited
States Code.
[12 u se 4308.]
SECTION 270—Administrative
Enforcement
In general.
(a )
C om pliance w ith the require
m ents im posed under this A ct shall be en
forced under—
( 1 ) section 8 o f the Federal D ep osit Insur
ance A c t—
(A )
by the appropriate Federal banking
§27 0
agency (a s defined in section 3 ( q ) o f the
Federal D ep osit Insurance A c t) in the
case o f insured depository institutions (as
defined in section 3 ( c ) ( 2 ) o f such A ct);
( B ) by the Federal D ep osit Insurance
C orporation in the case o f depository in
stitutions described in clause ( i ) , ( ii ) , or
( iii) o f section 1 9 ( b ) ( 1 ) ( A ) o f the F ed
eral R eserve A c t w hich are not insured
depository institutions (a s defined in sec
tion 3 ( c ) ( 2 ) o f the Federal D ep osit In
surance A c t); and
(C ) by the D irector o f the Office o f
T hrift Supervision in the case o f d eposi
tory institutions described in clause ( v )
and or ( v i) o f section 1 9 ( b ) ( 1 ) ( A ) o f
the Federal R eserve A c t w h ich are not
insured depository institutions (a s de
fined in section 3 ( c ) ( 2 ) o f the Federal
D ep osit Insurance A c t); and
( 2 ) the Federal C redit U n ion A ct, by the
N ation al C redit U n ion A dm inistration
Board in the case o f depository institutions
described in clause
( iv )
o f section
1 9 ( b ) ( 1 ) ( A ) o f the Federal R eserve A ct.
Additional enforcement powers.
(b )
( 1 ) F or purposes o f the exercise by any
agency referred to in subsection ( a ) o f such
agency’s pow ers under any A c t referred to
in such subsection, a violation o f a require
m ent im posed under this A c t shall be
deem ed to be a violation o f a requirem ent
im posed under that A ct.
( 2 ) In addition to the pow ers o f any agen
cy referred to in subsection ( a ) under any
provision o f law specifically referred to in
such subsection, each such agency m ay ex
ercise, for purposes o f enforcing com pliance
w ith any requirem ent im posed under this
A ct, any other authority conferred on such
agency by law.
( c ) Regulations by agencies other than the
board. T he authority o f the Board to issue
regulations under this A c t does n ot im pair the
authority o f any other agency referred to in
subsection ( a ) to m ake rules regarding its
ow n procedures in enforcing com pliance w ith
the requirem ents im posed under this A ct.
[12 USC 4309.]
25
Truth in Savings Act
§271
SECTION 271—Civil Liability
Civil liability.
(a )
E xcept as otherw ise pro
vided in this section, any depository
institution w hich fails to com ply w ith any re
quirem ent im posed under this A ct or any reg
ulation prescribed under this A ct w ith respect
to any person w ho is an account holder is lia
ble to such person in an am ount equal to the
sum o f—
( 1 ) any actual dam age sustained by such
person as a result o f the failure;
( 2 ) ( A ) in the case o f an individual action,
such additional am ount as the court m ay
allow , except that the liability under this
subparagraph shall not be less than $ 1 0 0
nor greater than $1,000; or
( B ) in the case o f a class action, such
am ount as the court m ay allow, except
that—
( i ) as to each mem ber o f the class, no
m inim um recovery shall be applicable;
and
( i i ) the total recovery under this subparagraph in any class action or series
o f class actions arising out o f the sam e
failure to com ply by the sam e d eposi
tory institution shall not be m ore than
the lesser o f $ 5 0 0 ,0 0 0 or 1 percent o f
the net w orth o f the depository institu
tion involved; and
( 3 ) in the case o f any successful action to
enforce any liability under paragraph ( 1 )
or ( 2 ) , the costs o f the action, together w ith
a reasonable attorney’s fee as determ ined by
the court.
Class action awards.
(b )
In determ ining the
am ount o f any award in any class action, the
court shall consider, am ong other relevant
factors—
( 1 ) the am ount o f any actual dam ages
awarded;
( 2 ) the frequency and persistence o f fail
ures o f compliance;
( 3 ) the resources o f the depository
institution;
( 4 ) the num ber o f persons adversely affect
ed; and
( 5 ) the extent to w hich the failure o f com
pliance w as intentional.
26
Bona fide errors.
(c )
( 1 ) A depository institution m ay not be
held liable in any action brought under this
section for a violation o f this A ct if the de
pository institution dem onstrates by a pre
ponderance o f the evidence that the viola
tion w as not intentional and resulted from a
bona fide error, notw ithstanding the m ain
tenance o f procedures reasonably adapted
to avoid any such error.
( 2 ) E xam ples o f a bona fide error include
clerical, calculation, com puter m alfunction
and program m ing, and printing errors, ex
cept that an error o f legal judgm ent w ith
respect to a depository institution’s obliga
tion under this A ct is not a bona fide error.
No liability for overpayment.
(d )
A deposito
ry institution m ay not be held liable in any
action under this section for a violation o f this
A ct if the violation has resulted in—
( 1 ) an interest paym ent to the account
holder in an am ount greater than the
am ount determ ined under any disclosed
rate o f interest applicable w ith respect to
such payment; or
( 2 ) a charge to the consum er in an am ount
less than the am ount determ ined under the
d isclosed charge or fee schedule applicable
w ith respect to such charge.
Jurisdiction.
(e )
A n y action under this sec
tion m ay be brought in any U nited States dis
trict court, or in any other court o f com petent
jurisdiction, w ithin 1 year after the date o f the
occurrence o f the violation involved.
Reliance on board rulings.
(f)
N o provision
o f this section im posing any liability shall ap
ply to any act done or om itted in good faith in
conform ity w ith any regulation or order, or
any interpretation o f any regulation or order,
o f the Board, or in conform ity w ith any inter
pretation or approval by an official or em ploy
ee o f the Board duly authorized by the Board
to issue such interpretation or approval under
procedures prescribed by the Board, n otw ith
standing, the fact that after such act or
om ission has occurred, such regulation, order,
interpretation, or approval is am ended, re
scinded, or determ ined by judicial or other au
thority to be invalid for any reason.
(g )
Notification of and adjustment for errors.
Truth in Savings Act
A depository institution shall not be liable un
der this section or section 270 for any failure
to comply with any requirement imposed un
der this Act with respect to any account if—
(1) before—
(A ) the end of the 60-day period begin
ning on the date on which the depository
institution discovered the failure to
comply;
(B) any action is instituted against the
depository institution by the account
holder under this section with respect to
such failure to comply; and
(C) any written notice of such failure to
comply is received by the depository in
stitution from the account holder,
the depository institution notifies the ac
count holder of the failure of such institu
tion to comply with such requirement; and
(2) the depository institution makes such
adjustments as may be necessary with re
spect to such account to ensure that—
(A) the account holder will not be liable
for any amount in excess of the amount
actually disclosed with respect to any fee
or charge;
(B) the account holder will not be liable
for any fee or charge imposed under any
condition not actually disclosed; and
(C) interest on amounts in such account
will accrue at the annual percentage
yield, and under the conditions, actually
disclosed (and credit will be provided for
interest already accrued at a different an
nual percentage yield and under different
conditions than the yield or conditions
disclosed).
§273
the continuing failure of any depository in
stitution to disclose any particular term re
quired to be disclosed under this Act with
respect to a particular account shall be
treated as a single violation for purposes of
determining the amount of any liability of
such institution under subsection (a) for
such failure to disclose.
(2) The continuing failure of any deposito
ry institution to disclose any particular
term required to be disclosed under this Act
with respect to a particular account after
judgment has been rendered in favor of the
account holder in connection with a prior
failure to disclose such term with respect to
such account shall be treated as a subse
quent violation for purposes of determining
liability under subsection (a).
(3) This subsection shall not limit or oth
erwise affect the enforcement power under
section 270 of any agency referred to in sub
section (a) of such section.
[12 USC 4310.]
SECTION 272—Credit Unions
(a) In general. No regulation prescribed by
the Board under this Act shall apply directly
with respect to any depository institution de
scribed in clause (iv) of section 1 9 (b )(1)(A )
of the Federal Reserve Act.
(b) Regulations prescribed by the NCUA.
Within 90 days of the effective date of any
regulation prescribed by the Board under this
Act, the National Credit Union Administra
tion Board shall prescribe a regulation sub
(h) Multiple interests in 1 account. If more stantially similar to the regulation prescribed
than 1 person holds an interest in any ac by the Board taking into account the unique
count—
nature of credit unions and the limitations un
(1) the minimum and maximum amounts der which they may pay dividends on member
of liability under subsection (a) (2) (A) for accounts.
any failure to comply with the requirements
of this Act shall apply with respect to such [12 USC 4311.]
account; and
(2) the court shall determine the manner
in which the amount of any such liability SECTION 273—Effect on State Law
with respect to such account shall be dis
The provisions of this Act do not supersede
tributed among such persons.
any provisions of the law of any State relating
to the disclosure of yields payable or terms for
(i) Continuing failure to disclose.
(1) Except as provided in paragraph (2), accounts to the extent such State law requires
27
Truth in Savings Act
§273
the disclosure of such yields or terms for ac
counts, except to the extent that those laws
are inconsistent with the provisions of this
Act, and then only to the extent of the incon
sistency. The Board may determine whether
such inconsistencies exist.
[12 USC 4312.]
SECTION 274—Definitions
For the purposes of this Act—
(1) The term “account” means any ac
count offered to 1 or more individuals or an
unincorporated nonbusiness association of
individuals by a depository institution into
which a customer deposits funds, including
demand accounts, time accounts, negotiable
order of withdrawal accounts, and share
draft accounts.
(2) The term “annual percentage yield”
means the total amount of interest that
would be received on a $100 deposit, based
on the annual rate of simple interest and the
frequency of compounding for a 365-day
period, expressed as a percentage calculated
by a method which shall be prescribed by
the Board in regulations.
(3) The term “annual rate of simple
interest”—
28
(A ) means the annualized rate of inter
est paid with respect to each compound
ing period, expressed as a percentage;
and
(B) may be referred to as the “annual
percentage rate”.
(4) The term “Board” means the Board of
Governors of the Federal Reserve System.
(5) The term “deposit broker”—
(A ) has the meaning given to such term
in section 2 9(f)(1 ) of the Federal Depo
sit Insurance Act; and
(B) includes any person who solicits any
amount from any other person for depo
sit in an insured depository institution.
(6) The term “depository institution” has
the meaning given such term in clauses (i)
through (vi) of section 1 9 (b )(1)(A ) of the
Federal Reserve Act.
(7) The term “interest” includes dividends
paid with respect to share draft accounts
which are accounts within the meaning of
paragraph (3).
(8) The term “multiple rate account”
means any account that has 2 or more an
nual rates of simple interest which take ef
fect at the same time or in succeeding peri
ods and which are known at the time of
disclosure.
[12 USC 4313.]
@FedFRASER