79276 Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 

1Public Law 111–203, 124 Stat. 1376 (2010). 

2 Dodd-Frank section 1029 generally excludes 

from this transfer of authority, subject to certain 

exceptions, any rulemaking authority over a motor 

vehicle dealer that is predominantly engaged in the 

sale and servicing of motor vehicles, the leasing and 

servicing of motor vehicles, or both. Further, DoddFrank section 1100B did not grant the Bureau TISA 

rulemaking authority over credit unions or repeal 

the NCUA’s TISA rulemaking authority over credit 

unions under 12 U.S.C. 4311. 3See 76 FR 42020 (July 18, 2011). 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1030 

[Docket No. CFPB–2011–0032] 

RIN 3170–AA06 

Truth in Savings (Regulation DD) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Interim final rule with request 

for public comment. 

SUMMARY: Title X of the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act) 

transferred rulemaking authority for a 

number of consumer financial 

protection laws from seven federal 

agencies to the Bureau of Consumer 

Financial Protection (Bureau) as of July 

21, 2011. The Bureau is in the process 

of republishing the regulations 

implementing those laws with technical 

and conforming changes to reflect the 

transfer of authority and certain other 

changes made by the Dodd-Frank Act. 

In light of the transfer of the Board of 

Governors of the Federal Reserve 

System’s (Board’s) rulemaking authority 

for the Truth in Savings Act (TISA) to 

the Bureau, the Bureau is publishing for 

public comment an interim final rule 

establishing a new Regulation DD (Truth 

in Savings). This interim final rule does 

not impose any new substantive 

obligations on persons subject to the 

existing Regulation DD, previously 

published by the Board. 

DATES: This interim final rule is 

effective December 30, 2011. Comments 

must be received on or before February 

21, 2012. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2011– 

0032 or RIN 3170–AA06, by any of the 

following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Monica Jackson, Office of the 

Executive Secretary, Bureau of 

Consumer Financial Protection, 1500 

Pennsylvania Avenue NW., (Attn: 1801 

L Street), Washington, DC 20220. 

• Hand Delivery/Courier in Lieu of 

Mail: Monica Jackson, Office of the 

Executive Secretary, Bureau of 

Consumer Financial Protection, 1700 G 

Street NW., Washington, DC 20006. 

All submissions must include the 

agency name and docket number or 

Regulatory Information Number (RIN) 

for this rulemaking. In general, all 

comments received will be posted 

without change to http:// 

www.regulations.gov. In addition, 

comments will be available for public 

inspection and copying at 1700 G Street 

NW., Washington, DC 20006, on official 

business days between the hours of 10 

a.m. and 5 p.m. Eastern Time. You can 

make an appointment to inspect the 

documents by telephoning (202) 435– 

7275. 

All comments, including attachments 

and other supporting materials, will 

become part of the public record and 

subject to public disclosure. Sensitive 

personal information, such as account 

numbers or social security numbers, 

should not be included. Comments will 

not be edited to remove any identifying 

or contact information. 

FOR FURTHER INFORMATION CONTACT: 

Krista Ayoub or Stephen Shin, Office of 

Regulations, at (202) 435–7700. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Congress enacted the Truth in Savings 

Act (TISA), 12 U.S.C. 4301 et seq., based 

on findings that economic stability 

would be enhanced, competition 

between depository institutions would 

be improved, and consumers’ ability to 

make informed decisions regarding 

deposit accounts would be strengthened 

if there was uniformity in the disclosure 

of interest rates and fees. The purpose 

of the act and regulation is to assist 

consumers in comparing deposit 

accounts offered by depository 

institutions, principally through the 

disclosure of fees, the annual percentage 

yield, the interest rate, and other 

account terms. Historically, TISA has 

been implemented in Regulation DD of 

the Board of Governors of the Federal 

Reserve System (Board), 12 CFR part 

230, and, with respect to credit unions, 

by regulations of the National Credit 

Union Administration (NCUA), 12 CFR 

part 707. The Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(Dodd-Frank Act) 1 amended a number 

of consumer financial protection laws, 

including TISA. In addition to various 

substantive amendments, the DoddFrank Act transferred the Board’s 

rulemaking authority for TISA to the 

Bureau of Consumer Financial 

Protection (Bureau), effective July 21, 

2011.2 See sections 1061 and 1100B of 

the Dodd-Frank Act. Pursuant to the 

Dodd-Frank Act and TISA, as amended, 

the Bureau is publishing for public 

comment an interim final rule 

establishing a new Regulation DD (Truth 

in Savings), 12 CFR Part 1030, 

implementing TISA. 

II. Summary of the Interim Final Rule 

A. General 

The interim final rule substantially 

duplicates the Board’s Regulation DD as 

the Bureau’s new Regulation DD, 12 

CFR part 1030, making only certain nonsubstantive, technical, formatting, and 

stylistic changes. To minimize any 

potential confusion, the Bureau is 

preserving where possible past 

numbering systems by republishing 

regulations with Bureau part numbers 

that correspond to regulations in 

existence prior to the transfer of 

rulemaking authority. For example, 

while this interim final rule generally 

incorporates the Board’s existing 

regulatory text, appendices (including 

model forms and clauses), and 

supplements, as amended,3 the rule has 

been edited as necessary to reflect 

nomenclature and other technical 

amendments required by the DoddFrank Act. Notably, this interim final 

rule does not impose any new 

substantive obligations on regulated 

entities. 

B. Specific Changes 

In addition to the changes described 

above, the Bureau is making certain 

nomenclature and other non-substantive 

changes for clarity and consistency. For 

example, references to the Board and its 

administrative structure have been 

replaced with references to the Bureau. 

Conforming edits have been made to 

internal cross-references and addresses 

for filing applications and notices. In 

addition, edits to subheadings and 

numbering have been made for 

consistency and to fix typographical 

errors. Footnotes have been moved to 

the text of the regulation or 

commentary, as appropriate. 

III. Legal Authority 

A. Rulemaking Authority 

The Bureau is issuing this interim 

final rule pursuant to its authority under 

TISA and the Dodd-Frank Act. Effective 

July 21, 2011, section 1061 of the DoddFrank Act transferred to the Bureau the 

‘‘consumer financial protection 

functions’’ previously vested in certain 

other federal agencies. The term 

‘‘consumer financial protection 

function’’ is defined to include ‘‘all 

authority to prescribe rules or issue 


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4Public Law 111–203, section 1061(a)(1). 

Effective on the designated transfer date, July 21, 

2011, the Bureau was also granted ‘‘all powers and 

duties’’ vested in each of the federal agencies, 

relating to the consumer financial protection 

functions, on the day before the designated transfer 

date. Until this and other interim final rules take 

effect, existing regulations for which rulemaking 

authority transferred to the Bureau continue to 

govern persons covered by this rule. See 76 FR 

43569 (July 21, 2011). See also footnote 2, supra. 

5Public Law 111–203, section 1002(14) (defining 

‘‘Federal consumer financial law’’ to include the 

‘‘enumerated consumer laws’’); id. section 1002(12) 

(defining ‘‘enumerated consumer laws’’ to include 

TISA). 

6Section 1066 of the Dodd-Frank Act grants the 

Secretary of the Treasury interim authority to 

perform certain functions of the Bureau. Pursuant 

to that authority, Treasury is publishing this interim 

final rule on behalf of the Bureau. 

7 Id. Section 1100B(1); 12 U.S.C. 4302–4304, 

4308. 

8 Id. 

9 5 U.S.C. 551 et seq. 

10 5 U.S.C. 553(b), (c). 

11 5 U.S.C. 553(b)(3)(A), (B). 

12This interim final rule is one of 14 companion 

rulemakings that together restate and recodify the 

implementing regulations under 14 existing 

consumer financial laws (part III.C, below, lists the 

14 laws involved). In the interest of proper 

coordination of this overall regulatory framework, 

which includes numerous cross-references among 

some of the regulations, the Bureau is establishing 

the same effective date of December 30, 2011 for 

those rules published on or before that date and 

making those published thereafter (if any) effective 

immediately. 

13Section 1022(b)(2)(A) of the Dodd-Frank Act 

addresses the consideration of the potential benefits 

and costs of regulation to consumers and covered 

persons, including the potential reduction of access 

by consumers to consumer financial products or 

services; the impact on depository institutions and 

credit unions with $10 billion or less in total assets 

as described in section 1026 of the Dodd-Frank Act; 

and the impact on consumers in rural areas. Section 

1022(b)(2)(B) requires that the Bureau ‘‘consult with 

the appropriate prudential regulators or other 

Federal agencies prior to proposing a rule and 

during the comment process regarding consistency 

with prudential, market, or systemic objectives 

administered by such agencies.’’ The manner and 

extent to which these provisions apply to interim 

final rules and to benefits, costs, and impacts that 

are compelled by statutory changes rather than 

discretionary Bureau action is unclear. 

Nevertheless, to inform this rulemaking more fully, 

the Bureau performed the described analyses and 

consultations. 

orders or guidelines pursuant to any 

Federal consumer financial law, 

including performing appropriate 

functions to promulgate and review 

such rules, orders, and guidelines.’’ 4

TISA is a federal consumer financial 

law.5 Accordingly, effective July 21, 

2011, the authority of the Board to issue 

regulations pursuant to TISA transferred 

to the Bureau.6

The TISA, as amended, authorizes the 

Bureau to issue regulations to carry out 

the provisions of TISA.7 These 

regulations may contain such 

classifications, differentiations, or other 

provisions, and may provide for such 

adjustments and exceptions for any 

class of transactions, that in the 

Bureau’s judgment are necessary or 

proper to effectuate the purpose of 

TISA, facilitate compliance with TISA, 

or prevent circumvention or evasion of 

TISA.8

B. Authority To Issue an Interim Final 

Rule Without Prior Notice and Comment 

The Administrative Procedure Act 

(APA) 9 generally requires public notice 

and an opportunity to comment before 

promulgation of regulations.10 The APA 

provides exceptions to notice-andcomment procedures, however, where 

an agency for good cause finds that such 

procedures are impracticable, 

unnecessary, or contrary to the public 

interest or when a rulemaking relates to 

agency organization, procedure, and 

practice.11 The Bureau finds that there 

is good cause to conclude that providing 

notice and opportunity for comment 

would be unnecessary and contrary to 

the public interest under these 

circumstances. In addition, substantially 

all the changes made by this interim 

final rule, which were necessitated by 

the Dodd-Frank Act’s transfer of TISA 

authority from the Board to the Bureau, 

relate to agency organization, procedure, 

and practice and are thus exempt from 

the APA’s notice-and-comment 

requirements. 

The Bureau’s good cause findings are 

based on the following considerations. 

As an initial matter, the Board’s existing 

regulation was a result of notice-andcomment rulemaking to the extent 

required. Moreover, the interim final 

rule published today does not impose 

any new, substantive obligations on 

regulated entities. Rather, the interim 

final rule makes only non-substantive, 

technical changes to the existing text of 

the regulation, such as renumbering, 

changing internal cross-references, 

replacing appropriate nomenclature to 

reflect the transfer of authority to the 

Bureau, and changing the address for 

filing applications and notices. Given 

the technical nature of these changes, 

and the fact that the interim final rule 

does not impose any additional 

substantive requirements on covered 

entities, an opportunity for prior public 

comment is unnecessary. In addition, 

recodifying the Board’s regulations to 

reflect the transfer of authority to the 

Bureau will help facilitate compliance 

with TISA and its implementing 

regulation, and the new regulations will 

help reduce uncertainty regarding the 

applicable regulatory framework. Using 

notice-and comment procedures would 

delay this process and thus be contrary 

to the public interest. 

The APA generally requires that rules 

be published not less than 30 days 

before their effective dates. See 5 U.S.C. 

553(d). As with the notice and comment 

requirement, however, the APA allows 

an exception when ‘‘otherwise provided 

by the agency for good cause found and 

published with the rule.’’ 5 U.S.C. 

553(d)(3). The Bureau finds that there is 

good cause for providing less than 30 

days notice here. A delayed effective 

date would harm consumers and 

regulated entities by needlessly 

perpetuating discrepancies between the 

amended statutory text and the 

implementing regulation, thereby 

hindering compliance and prolonging 

uncertainty regarding the applicable 

regulatory framework.12

In addition, delaying the effective 

date of the interim final rule for 30 days 

would provide no practical benefit to 

regulated entities in this context and in 

fact could operate to their detriment. As 

discussed above, the interim final rule 

published today does not impose any 

new, substantive obligations on 

regulated entities. Instead, the rule 

makes only non-substantive, technical 

changes to the existing text of the 

regulation. Thus, regulated entities that 

are already in compliance with the 

existing rules will not need to modify 

business practices as a result of this 

rule. 

C. Section 1022(b)(2) of the Dodd-Frank 

Act 

In developing the interim final rule, 

the Bureau has conducted an analysis of 

potential benefits, costs, and impacts.13

The Bureau believes that the interim 

final rule will benefit consumers and 

covered persons by updating and 

recodifying Regulation DD to reflect the 

transfer of authority to the Bureau and 

certain other changes mandated by the 

Dodd-Frank Act. This will help 

facilitate compliance with TISA and its 

implementing regulations and help 

reduce any uncertainty regarding the 

applicable regulatory framework. The 

interim final rule will not impose any 

new substantive obligations on 

consumers or covered persons and is 

not expected to have any impact on 

consumers’ access to consumer financial 

products and services. 

Although not required by the interim 

final rule, depository institutions may 

incur some costs in updating 

compliance manuals and related 

materials to reflect the new numbering 

and other technical changes reflected in 

the new Regulation DD. The Bureau has 

worked to reduce any such burden by 

preserving the existing numbering to the 

extent possible and believes that such 

costs will likely be minimal. These 


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79278 Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 

14The fourteen laws implemented by this and its 

companion rulemakings are: The Consumer Leasing 

Act, the Electronic Fund Transfer Act (except with 

respect to section 920 of that Act), the Equal Credit 

Opportunity Act, the Fair Credit Reporting Act 

(except with respect to sections 615(e) and 628 of 

that act), the Fair Debt Collection Practices Act, 

Subsections (b) through (f) of section 43 of the 

Federal Deposit Insurance Act, sections 502 through 

509 of the Gramm-Leach-Bliley Act (except for 

section 505 as it applies to section 501(b)), the 

Home Mortgage Disclosure Act, the Real Estate 

Settlement Procedures Act, the S.A.F.E. Mortgage 

Licensing Act, the Truth in Lending Act, the Truth 

in Savings Act, section 626 of the Omnibus 

Appropriations Act, 2009, and the Interstate Land 

Sales Full Disclosure Act. 

15 In light of the technical but voluminous nature 

of this recodification project, the Bureau focused 

the consultation process on a representative sample 

of the recodified regulations, while making 

information on the other regulations available. The 

Bureau expects to conduct differently its future 

consultations regarding substantive rulemakings. 

16 5 U.S.C. 601 et seq. 

17 5 U.S.C. 603, 604. 

18 5 U.S.C. 609. 

19 5 U.S.C. 603(a), 604(a); 5 U.S.C. 553(b)(B). 

20 5 U.S.C. 609(b). 

changes could be handled in the short 

term by providing a short, standalone 

summary alerting users to the changes 

and in the long term could be combined 

with other updates at the creditor’s 

convenience. The Bureau intends to 

continue investigating the possible costs 

to affected entities of updating manuals 

and related materials to reflect these 

changes and solicits comments on this 

and other issues discussed in this 

section. 

The interim final rule will have no 

unique impact on depository 

institutions or credit unions with $10 

billion or less in assets as described in 

section 1026(a) of the Dodd-Frank Act. 

Also, the interim final rule will have no 

unique impact on rural consumers. 

In undertaking the process of 

recodifying Regulation DD, as well as 

regulations implementing thirteen other 

existing consumer financial laws, 14 the 

Bureau consulted the Federal Deposit 

Insurance Corporation, the Office of the 

Comptroller of the Currency, the 

National Credit Union Administration, 

the Board of Governors of the Federal 

Reserve System, the Federal Trade 

Commission, and the Department of 

Housing and Urban Development, 

including with respect to consistency 

with any prudential, market, or systemic 

objectives that may be administered by 

such agencies.15 The Bureau also has 

consulted with the Office of 

Management and Budget for technical 

assistance. The Bureau expects to have 

further consultations with the 

appropriate federal agencies during the 

comment period. 

IV. Request for Comment 

Although notice and comment 

rulemaking procedures are not required, 

the Bureau invites comments on this 

notice. Commenters are specifically 

encouraged to identify any technical 

issues raised by the rule. The Bureau is 

also seeking comment in response to a 

notice published at 76 FR 75825 (Dec. 

5, 2011) concerning its efforts to identify 

priorities for streamlining regulations 

that it has inherited from other federal 

agencies to address provisions that are 

outdated, unduly burdensome, or 

unnecessary. 

V. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

as amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996, requires each agency to consider 

the potential impact of its regulations on 

small entities, including small 

businesses, small governmental units, 

and small not-for-profit organizations.16

The RFA generally requires an agency to 

conduct an initial regulatory flexibility 

analysis (IRFA) and a final regulatory 

flexibility analysis (FRFA) of any rule 

subject to notice-and-comment 

rulemaking requirements, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities.17

The Bureau also is subject to certain 

additional procedures under the RFA 

involving the convening of a panel to 

consult with small business 

representatives prior to proposing a rule 

for which an IRFA is required.18

The IRFA and FRFA requirements 

described above apply only where a 

notice of proposed rulemaking is 

required,19 and the panel requirement 

applies only when a rulemaking 

requires an IRFA.20 As discussed above 

in part III, a notice of proposed 

rulemaking is not required for this 

rulemaking. 

In addition, as discussed above, this 

interim final rule has only a minor 

impact on entities subject to Regulation 

DD. The rule imposes no new, 

substantive obligations on depository 

institutions. Accordingly, the 

undersigned certifies that this interim 

final rule will not have a significant 

economic impact on a substantial 

number of small entities. 

VI. Paperwork Reduction Act 

The Bureau may not conduct or 

sponsor, and a respondent is not 

required to respond to, an information 

collection unless it displays a currently 

valid Office of Management and Budget 

(OMB) control number. This rule 

contains information collection 

requirements under the Paperwork 

Reduction Act (PRA), which have been 

previously approved by OMB, and the 

ongoing PRA burden for which is 

unchanged by this rule. There are no 

new information collection 

requirements in this interim final rule. 

The Bureau’s OMB control number for 

this information collection is: 3170– 

0004. 

List of Subjects in 12 CFR Part 1030 

Advertising, Banks, Banking, 

Consumer protection, National banks, 

Reporting and recordkeeping 

requirements, Savings associations, 

Truth in savings. 

Authority and Issuance 

For the reasons set forth above, the 

Bureau of Consumer Financial 

Protection adds Part 1030 to Chapter X 

in Title 12 of the Code of Federal 

Regulations to read as follows: 

PART 1030—TRUTH IN SAVINGS 

(REGULATION DD) 

Sec. 

1030.1 Authority, purpose, coverage, and 

effect on state laws. 

1030.2 Definitions. 

1030.3 General disclosure requirements. 

1030.4 Account disclosures. 

1030.5 Subsequent disclosures. 

1030.6 Periodic statement disclosures. 

1030.7 Payment of interest. 

1030.8 Advertising. 

1030.9 Enforcement and record retention. 

1030.10 [Reserved] 

1030.11 Additional disclosure requirements 

for overdraft services. 

Appendix A to Part 1030—Annual 

Percentage Yield Calculation 

Appendix B to Part 1030—Model Clauses 

and Sample Forms 

Appendix C to Part 1030—Effect on State 

Laws 

Appendix D to Part 1030—Issuance of 

Official Interpretations 

Supplement I to Part 1030—Official 

Interpretations 

Authority: 12 U.S.C. 4302–4304, 4308, 

5512, 5581. 

§ 1030.1 Authority, purpose, coverage, and 

effect on state laws. 

(a) Authority. This part, known as 

Regulation DD, is issued by the Bureau 

of Consumer Financial Protection to 

implement the Truth in Savings Act of 

1991 (the act), contained in the Federal 

Deposit Insurance Corporation 

Improvement Act of 1991 (12 U.S.C. 

3201 et seq., Public Law 102–242, 105 

Stat. 2236), as amended by Title X, 

section 1100B of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (Pub. L. 111–203, 124 Stat. 1376). 

Information-collection requirements 

contained in this part have been 

approved by the Office of Management 

and Budget under the provisions of 44 


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U.S.C. 3501 et seq. and have been 

assigned OMB No. 3170–0004. 

(b) Purpose. The purpose of this part 

is to enable consumers to make 

informed decisions about accounts at 

depository institutions. This part 

requires depository institutions to 

provide disclosures so that consumers 

can make meaningful comparisons 

among depository institutions. 

(c) Coverage. This part applies to 

depository institutions except for credit 

unions. In addition, the advertising 

rules in § 1030.8 of this part apply to 

any person who advertises an account 

offered by a depository institution, 

including deposit brokers. 

(d) Effect on state laws. State law 

requirements that are inconsistent with 

the requirements of the act and this part 

are preempted to the extent of the 

inconsistency. Additional information 

on inconsistent state laws and the 

procedures for requesting a preemption 

determination from the Bureau are set 

forth in appendix C of this part. 

§ 1030.2 Definitions. 

For purposes of this part, the 

following definitions apply: 

(a) Account means a deposit account 

at a depository institution that is held 

by or offered to a consumer. It includes 

time, demand, savings, and negotiable 

order of withdrawal accounts. For 

purposes of the advertising 

requirements in § 1030.8 of this part, the 

term also includes an account at a 

depository institution that is held by or 

on behalf of a deposit broker, if any 

interest in the account is held by or 

offered to a consumer. 

(b) Advertisement means a 

commercial message, appearing in any 

medium, that promotes directly or 

indirectly: 

(1) The availability or terms of, or a 

deposit in, a new account; and 

(2) For purposes of §§ 1030.8(a) and 

1030.11 of this part, the terms of, or a 

deposit in, a new or existing account. 

(c) Annual percentage yield means a 

percentage rate reflecting the total 

amount of interest paid on an account, 

based on the interest rate and the 

frequency of compounding for a 365-day 

period and calculated according to the 

rules in appendix A of this part. 

(d) Average daily balance method 

means the application of a periodic rate 

to the average daily balance in the 

account for the period. The average 

daily balance is determined by adding 

the full amount of principal in the 

account for each day of the period and 

dividing that figure by the number of 

days in the period. 

(e) Bureau means the Bureau of 

Consumer Financial Protection. 

(f) Bonus means a premium, gift, 

award, or other consideration worth 

more than $10 (whether in the form of 

cash, credit, merchandise, or any 

equivalent) given or offered to a 

consumer during a year in exchange for 

opening, maintaining, renewing, or 

increasing an account balance. The term 

does not include interest, other 

consideration worth $10 or less given 

during a year, the waiver or reduction 

of a fee, or the absorption of expenses. 

(g) Business day means a calendar day 

other than a Saturday, a Sunday, or any 

of the legal public holidays specified in 

5 U.S.C. 6103(a). 

(h) Consumer means a natural person 

who holds an account primarily for 

personal, family, or household 

purposes, or to whom such an account 

is offered. The term does not include a 

natural person who holds an account for 

another in a professional capacity. 

(i) Daily balance method means the 

application of a daily periodic rate to 

the full amount of principal in the 

account each day. 

(j) Depository institution and 

institution mean an institution defined 

in section 19(b)(1)(A)(i) through (vi) of 

the Federal Reserve Act (12 U.S.C. 461), 

except credit unions defined in section 

19(b)(1)(A)(iv). 

(k) Deposit broker means any person 

who is a deposit broker as defined in 

section 29(g) of the Federal Deposit 

Insurance Act (12 U.S.C. 1831f(g)). 

(l) Fixed-rate account means an 

account for which the institution 

contracts to give at least 30 calendar 

days advance written notice of 

decreases in the interest rate. 

(m) Grace period means a period 

following the maturity of an 

automatically renewing time account 

during which the consumer may 

withdraw funds without being assessed 

a penalty. 

(n) Interest means any payment to a 

consumer or to an account for the use 

of funds in an account, calculated by 

application of a periodic rate to the 

balance. The term does not include the 

payment of a bonus or other 

consideration worth $10 or less given 

during a year, the waiver or reduction 

of a fee, or the absorption of expenses. 

(o) Interest rate means the annual rate 

of interest paid on an account which 

does not reflect compounding. For the 

purposes of the account disclosures in 

§ 1030.4(b)(1)(i) of 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.’’ 

(p) Passbook savings account means a 

savings account in which the consumer 

retains a book or other document in 

which the institution records 

transactions on the account. 

(q) Periodic statement means a 

statement setting forth information 

about an account (other than a time 

account or passbook savings account) 

that is provided to a consumer on a 

regular basis four or more times a year. 

(r) State means a state, the District of 

Columbia, the commonwealth of Puerto 

Rico, and any territory or possession of 

the United States. 

(s) Stepped-rate account means an 

account that has two or more interest 

rates that take effect in succeeding 

periods and are known when the 

account is opened. 

(t) Tiered-rate account means an 

account that has two or more interest 

rates that are applicable to specified 

balance levels. 

(u) Time account means an account 

with a maturity of at least seven days in 

which the consumer generally does not 

have a right to make withdrawals for six 

days after the account is opened, unless 

the deposit is subject to an early 

withdrawal penalty of at least seven 

days’ interest on amounts withdrawn. 

(v) Variable-rate account means an 

account in which the interest rate may 

change after the account is opened, 

unless the institution contracts to give at 

least 30 calendar days advance written 

notice of rate decreases. 

§ 1030.3 General disclosure requirements. 

(a) Form. Depository institutions shall 

make the disclosures required by 

§§ 1030.4 through 1030.6 of this part, as 

applicable, clearly and conspicuously, 

in writing, and in a form the consumer 

may keep. The disclosures required by 

this part may be provided to the 

consumer in electronic form, subject to 

compliance with the consumer consent 

and other applicable provisions of the 

Electronic Signatures in Global and 

National Commerce Act (E-Sign Act) (15 

U.S.C. 7001 et seq.). The disclosures 

required by §§ 1030.4(a)(2) and 1030.8 

may be provided to the consumer in 

electronic form without regard to the 

consumer consent or other provisions of 

the E–Sign Act in the circumstances set 

forth in those sections. Disclosures for 

each account offered by an institution 

may be presented separately or 

combined with disclosures for the 

institution’s other accounts, as long as it 

is clear which disclosures are applicable 

to the consumer’s account. 

(b) General. The disclosures shall 

reflect the terms of the legal obligation 

of the account agreement between the 

consumer and the depository 

institution. Disclosures may be made in 

languages other than English, provided 


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79280 Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 

the disclosures are available in English 

upon request. 

(c) Relation to Regulation E (12 CFR 

Part 1005). Disclosures required by and 

provided in accordance with the 

Electronic Fund Transfer Act (15 U.S.C. 

1693 et seq.) and its implementing 

Regulation E (12 CFR Part 1005) that are 

also required by this part may be 

substituted for the disclosures required 

by this part. 

(d) Multiple consumers. If an account 

is held by more than one consumer, 

disclosures may be made to any one of 

the consumers. 

(e) Oral response to inquiries. In an 

oral response to a consumer’s inquiry 

about interest rates payable on its 

accounts, the depository institution 

shall state the annual percentage yield. 

The interest rate may be stated in 

addition to the annual percentage yield. 

No other rate may be stated. 

(f) Rounding and accuracy rules for 

rates and yields. (1) Rounding. The 

annual percentage yield, the annual 

percentage yield earned, and the interest 

rate shall be rounded to the nearest onehundredth of one percentage point 

(.01%) and expressed to two decimal 

places. For account disclosures, the 

interest rate may be expressed to more 

than two decimal places. 

(2) Accuracy. The annual percentage 

yield (and the annual percentage yield 

earned) will be considered accurate if 

not more than one-twentieth of one 

percentage point (.05%) above or below 

the annual percentage yield (and the 

annual percentage yield earned) 

determined in accordance with the rules 

in Appendix A of this part. 

§ 1030.4 Account disclosures. 

(a) Delivery of account disclosures. (1) 

Account opening. (i) General. A 

depository institution shall provide 

account disclosures to a consumer 

before an account is opened or a service 

is provided, whichever is earlier. An 

institution is deemed to have provided 

a service when a fee required to be 

disclosed is assessed. Except as 

provided in paragraph (a)(1)(ii) of this 

section, if the consumer is not present 

at the institution when the account is 

opened or the service is provided and 

has not already received the disclosures, 

the institution shall mail or deliver the 

disclosures no later than 10 business 

days after the account is opened or the 

service is provided, whichever is earlier. 

(ii) Timing of electronic disclosures. If 

a consumer who is not present at the 

institution uses electronic means (for 

example, an Internet Web site) to open 

an account or request a service, the 

disclosures required under paragraph 

(a)(1) of this section must be provided 

before the account is opened or the 

service is provided. 

(2) Requests. (i) A depository 

institution shall provide account 

disclosures to a consumer upon request. 

If a consumer who is not present at the 

institution makes a request, the 

institution shall mail or deliver the 

disclosures within a reasonable time 

after it receives the request and may 

provide the disclosures in paper form, 

or electronically if the consumer agrees. 

(ii) In providing disclosures upon 

request, the institution may: 

(A) Specify an interest rate and 

annual percentage yield that were 

offered within the most recent seven 

calendar days; state that the rate and 

yield are accurate as of an identified 

date; and provide a telephone number 

consumers may call to obtain current 

rate information. 

(B) State the maturity of a time 

account as a term rather than a date. 

(b) Content of account disclosures. 

Account disclosures shall include the 

following, as applicable: 

(1) Rate information. (i) Annual 

percentage yield and interest rate. The 

‘‘annual percentage yield’’ and the 

‘‘interest rate,’’ using those terms, and 

for fixed-rate accounts the period of 

time the interest rate will be in effect. 

(ii) Variable rates. For variable-rate 

accounts: 

(A) The fact that the interest rate and 

annual percentage yield may change; 

(B) How the interest rate is 

determined; 

(C) The frequency with which the 

interest rate may change; and 

(D) Any limitation on the amount the 

interest rate may change. 

(2) Compounding and crediting. (i) 

Frequency. The frequency with which 

interest is compounded and credited. 

(ii) Effect of closing an account. If 

consumers will forfeit interest if they 

close the account before accrued interest 

is credited, a statement that interest will 

not be paid in such cases. 

(3) Balance information. (i) Minimum 

balance requirements. (A) Any 

minimum balance required to: 

(1) Open the account; 

(2) Avoid the imposition of a fee; or 

(3) Obtain the annual percentage yield 

disclosed. 

(B) Except for the balance to open the 

account, the disclosure shall state how 

the balance is determined for these 

purposes. 

(ii) Balance computation method. An 

explanation of the balance computation 

method specified in § 1030.7 of this part 

used to calculate interest on the 

account. 

(iii) When interest begins to accrue. A 

statement of when interest begins to 

accrue on noncash deposits. 

(4) Fees. The amount of any fee that 

may be imposed in connection with the 

account (or an explanation of how the 

fee will be determined) and the 

conditions under which the fee may be 

imposed. 

(5) Transaction limitations. Any 

limitations on the number or dollar 

amount of withdrawals or deposits. 

(6) Features of time accounts. For 

time accounts: 

(i) Time requirements. The maturity 

date. 

(ii) Early withdrawal penalties. A 

statement that a penalty will or may be 

imposed for early withdrawal, how it is 

calculated, and the conditions for its 

assessment. 

(iii) Withdrawal of interest prior to 

maturity. If compounding occurs during 

the term and interest may be withdrawn 

prior to maturity, a statement that the 

annual percentage yield assumes 

interest remains on deposit until 

maturity and that a withdrawal will 

reduce earnings. For accounts with a 

stated maturity greater than one year 

that do not compound interest on an 

annual or more frequent basis, that 

require interest payouts at least 

annually, and that disclose an APY 

determined in accordance with section 

E of Appendix A of this part, a 

statement that interest cannot remain on 

deposit and that payout of interest is 

mandatory. 

(iv) Renewal policies. A statement of 

whether or not the account will renew 

automatically at maturity. If it will, a 

statement of whether or not a grace 

period will be provided and, if so, the 

length of that period must be stated. If 

the account will not renew 

automatically, a statement of whether 

interest will be paid after maturity if the 

consumer does not renew the account 

must be stated. 

(7) Bonuses. The amount or type of 

any bonus, when the bonus will be 

provided, and any minimum balance 

and time requirements to obtain the 

bonus. 

(c) Notice to existing account holders. 

(1) Notice of availability of disclosures. 

Depository institutions shall provide a 

notice to consumers who receive 

periodic statements and who hold 

existing accounts of the type offered by 

the institution on June 21, 1993. The 

notice shall be included on or with the 

first periodic statement sent on or after 

June 21, 1993 (or on or with the first 

periodic statement for a statement cycle 

beginning on or after that date). The 

notice shall state that consumers may 

request account disclosures containing 

terms, fees, and rate information for 

their account. In responding to such a 

request, institutions shall provide 


TKELLEY on DSK3SPTVN1PROD with RULES_2
Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 79281 

disclosures in accordance with 

paragraph (a)(2) of this section. 

(2) Alternative to notice. As an 

alternative to the notice described in 

paragraph (c)(1) of this section, 

institutions may provide account 

disclosures to consumers. The 

disclosures may be provided either with 

a periodic statement or separately, but 

must be sent no later than when the 

periodic statement described in 

paragraph (c)(1) is sent. 

§ 1030.5 Subsequent disclosures. 

(a) Change in terms. (1) Advance 

notice required. A depository institution 

shall give advance notice to affected 

consumers of any change in a term 

required to be disclosed under 

§ 1030.4(b) of this part if the change may 

reduce the annual percentage yield or 

adversely affect the consumer. The 

notice shall include the effective date of 

the change. The notice shall be mailed 

or delivered at least 30 calendar days 

before the effective date of the change. 

(2) No notice required. No notice 

under this section is required for: 

(i) Variable-rate changes. Changes in 

the interest rate and corresponding 

changes in the annual percentage yield 

in variable-rate accounts. 

(ii) Check printing fees. Changes in 

fees assessed for check printing. 

(iii) Short-term time accounts. 

Changes in any term for time accounts 

with maturities of one month or less. 

(b) Notice before maturity for time 

accounts longer than one month that 

renew automatically. For time accounts 

with a maturity longer than one month 

that renew automatically at maturity, 

institutions shall provide the 

disclosures described below before 

maturity. The disclosures shall be 

mailed or delivered at least 30 calendar 

days before maturity of the existing 

account. Alternatively, the disclosures 

may be mailed or delivered at least 20 

calendar days before the end of the 

grace period on the existing account, 

provided a grace period of at least five 

calendar days is allowed. 

(1) Maturities of longer than one year. 

If the maturity is longer than one year, 

the institution shall provide account 

disclosures set forth in § 1030.4(b) of 

this part for the new account, along with 

the date the existing account matures. If 

the interest rate and annual percentage 

yield that will be paid for the new 

account are unknown when disclosures 

are provided, the institution shall state 

that those rates have not yet been 

determined, the date when they will be 

determined, and a telephone number 

consumers may call to obtain the 

interest rate and the annual percentage 

yield that will be paid for the new 

account. 

(2) Maturities of one year or less but 

longer than one month. If the maturity 

is one year or less but longer than one 

month, the institution shall either: 

(i) Provide disclosures as set forth in 

paragraph (b)(1) of this section; or 

(ii) Disclose to the consumer: 

(A) The date the existing account 

matures and the new maturity date if 

the account is renewed; 

(B) The interest rate and the annual 

percentage yield for the new account if 

they are known (or that those rates have 

not yet been determined, the date when 

they will be determined, and a 

telephone number the consumer may 

call to obtain the interest rate and the 

annual percentage yield that will be 

paid for the new account); and 

(C) Any difference in the terms of the 

new account as compared to the terms 

required to be disclosed under 

§ 1030.4(b) of this part for the existing 

account. 

(c) Notice before maturity for time 

accounts longer than one year that do 

not renew automatically. For time 

accounts with a maturity longer than 

one year that do not renew 

automatically at maturity, institutions 

shall disclose to consumers the maturity 

date and whether interest will be paid 

after maturity. The disclosures shall be 

mailed or delivered at least 10 calendar 

days before maturity of the existing 

account. 

§ 1030.6 Periodic statement disclosures. 

(a) General rule. If a depository 

institution mails or delivers a periodic 

statement, the statement shall include 

the following disclosures: 

(1) Annual percentage yield earned. 

The ‘‘annual percentage yield earned’’ 

during the statement period, using that 

term, calculated according to the rules 

in Appendix A of this part. 

(2) Amount of interest. The dollar 

amount of interest earned during the 

statement period. 

(3) Fees imposed. Fees required to be 

disclosed under § 1030.4(b)(4) of this 

part that were debited to the account 

during the statement period. The fees 

shall be itemized by type and dollar 

amounts. Except as provided in 

§ 1030.11(a)(1) of this part, when fees of 

the same type are imposed more than 

once in a statement period, a depository 

institution may itemize each fee 

separately or group the fees together and 

disclose a total dollar amount for all fees 

of that type. 

(4) Length of period. The total number 

of days in the statement period, or the 

beginning and ending dates of the 

period. 

(5) Aggregate fee disclosure. If 

applicable, the total overdraft and 

returned item fees required to be 

disclosed by § 1030.11(a). 

(b) Special rule for average daily 

balance method. In making the 

disclosures described in paragraph (a) of 

this section, institutions that use the 

average daily balance method and that 

calculate interest for a period other than 

the statement period shall calculate and 

disclose the annual percentage yield 

earned and amount of interest earned 

based on that period rather than the 

statement period. The information in 

paragraph (a)(4) of this section shall be 

stated for that period as well as for the 

statement period. 

§ 1030.7 Payment of interest. 

(a) Permissible methods. (1) Balance 

on which interest is calculated. 

Institutions shall calculate interest on 

the full amount of principal in an 

account for each day by use of either the 

daily balance method or the average 

daily balance method. Institutions shall 

calculate interest by use of a daily rate 

of at least 1/365 of the interest rate. In 

a leap year a daily rate of 1/366 of the 

interest rate may be used. 

(2) Determination of minimum 

balance to earn interest. An institution 

shall use the same method to determine 

any minimum balance required to earn 

interest as it uses to determine the 

balance on which interest is calculated. 

An institution may use an additional 

method that is unequivocally beneficial 

to the consumer. 

(b) Compounding and crediting 

policies. This section does not require 

institutions to compound or credit 

interest at any particular frequency. 

(c) Date interest begins to accrue. 

Interest shall begin to accrue not later 

than the business day specified for 

interest-bearing accounts in section 606 

of the Expedited Funds Availability Act 

(12 U.S.C. 4005 et seq.) and the Board 

of Governors of the Federal Reserve 

System’s implementing Regulation CC 

(12 CFR part 229). Interest shall accrue 

until the day funds are withdrawn. 

§ 1030.8 Advertising. 

(a) Misleading or inaccurate 

advertisements. An advertisement shall 

not: 

(1) Be misleading or inaccurate or 

misrepresent a depository institution’s 

deposit contract; or 

(2) Refer to or describe an account as 

‘‘free’’ or ‘‘no cost’’ (or contain a similar 

term) if any maintenance or activity fee 

may be imposed on the account. The 

word ‘‘profit’’ shall not be used in 

referring to interest paid on an account. 


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79282 Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 

(b) Permissible rates. If an 

advertisement states a rate of return, it 

shall state the rate as an ‘‘annual 

percentage yield’’ using that term. (The 

abbreviation ‘‘APY’’ may be used 

provided the term ‘‘annual percentage 

yield’’ is stated at least once in the 

advertisement.) The advertisement shall 

not state any other rate, except that the 

‘‘interest rate,’’ using that term, may be 

stated in conjunction with, but not more 

conspicuously than, the annual 

percentage yield to which it relates. 

(c) When additional disclosures are 

required. Except as provided in 

paragraph (e) of this section, if the 

annual percentage yield is stated in an 

advertisement, the advertisement shall 

state the following information, to the 

extent applicable, clearly and 

conspicuously: 

(1) Variable rates. For variable-rate 

accounts, a statement that the rate may 

change after the account is opened. 

(2) Time annual percentage yield is 

offered. The period of time the annual 

percentage yield will be offered, or a 

statement that the annual percentage 

yield is accurate as of a specified date. 

(3) Minimum balance. The minimum 

balance required to obtain the 

advertised annual percentage yield. For 

tiered-rate accounts, the minimum 

balance required for each tier shall be 

stated in close proximity and with equal 

prominence to the applicable annual 

percentage yield. 

(4) Minimum opening deposit. The 

minimum deposit required to open the 

account, if it is greater than the 

minimum balance necessary to obtain 

the advertised annual percentage yield. 

(5) Effect of fees. A statement that fees 

could reduce the earnings on the 

account. 

(6) Features of time accounts. For 

time accounts: 

(i) Time requirements. The term of the 

account. 

(ii) Early withdrawal penalties: A 

statement that a penalty will or may be 

imposed for early withdrawal. 

(iii) Required interest payouts. For 

noncompounding time accounts with a 

stated maturity greater than one year 

that do not compound interest on an 

annual or more frequent basis, that 

require interest payouts at least 

annually, and that disclose an APY 

determined in accordance with section 

E of Appendix A of this part, a 

statement that interest cannot remain on 

deposit and that payout of interest is 

mandatory. 

(d) Bonuses. Except as provided in 

paragraph (e) of this section, if a bonus 

is stated in an advertisement, the 

advertisement shall state the following 

information, to the extent applicable, 

clearly and conspicuously: 

(1) The ‘‘annual percentage yield,’’ 

using that term; 

(2) The time requirement to obtain the 

bonus; 

(3) The minimum balance required to 

obtain the bonus; 

(4) The minimum balance required to 

open the account, if it is greater than the 

minimum balance necessary to obtain 

the bonus; and 

(5) When the bonus will be provided. 

(e) Exemption for certain 

advertisements. (1) Certain media. If an 

advertisement is made through one of 

the following media, it need not contain 

the information in paragraphs (c)(1), 

(c)(2), (c)(4), (c)(5), (c)(6)(ii), (d)(4), and 

(d)(5) of this section: 

(i) Broadcast or electronic media, such 

as television or radio; 

(ii) Outdoor media, such as billboards; 

or 

(iii) Telephone response machines. 

(2) Indoor signs. (i) Signs inside the 

premises of a depository institution (or 

the premises of a deposit broker) are not 

subject to paragraphs (b), (c), (d) or (e)(1) 

of this section. 

(ii) If a sign exempt by paragraph 

(e)(2) of this section states a rate of 

return, it shall: 

(A) State the rate as an ‘‘annual 

percentage yield,’’ using that term or the 

term ‘‘APY.’’ The sign shall not state 

any other rate, except that the interest 

rate may be stated in conjunction with 

the annual percentage yield to which it 

relates. 

(B) Contain a statement advising 

consumers to contact an employee for 

further information about applicable 

fees and terms. 

(f) Additional disclosures in 

connection with the payment of 

overdrafts. Institutions that promote the 

payment of overdrafts in an 

advertisement shall include in the 

advertisement the disclosures required 

by § 1030.11(b) of this part. 

§ 1030.9 Enforcement and record 

retention. 

(a) Administrative enforcement. 

Section 270 of the act (12 U.S.C. 4309) 

contains the provisions relating to 

administrative sanctions for failure to 

comply with the requirements of the act 

and this part. Compliance is enforced by 

the agencies listed in that section. 

(b) [Reserved] 

(c) Record retention. A depository 

institution shall retain evidence of 

compliance with this part for a 

minimum of two years after the date 

disclosures are required to be made or 

action is required to be taken. The 

administrative agencies responsible for 

enforcing this part may require 

depository institutions under their 

jurisdiction to retain records for a longer 

period if necessary to carry out their 

enforcement responsibilities under 

section 270 of the act. 

§ 1030.10 [Reserved] 

§ 1030.11 Additional disclosure 

requirements for overdraft services. 

(a) Disclosure of total fees on periodic 

statements. (1) General. A depository 

institution must separately disclose on 

each periodic statement, as applicable: 

(i) The total dollar amount for all fees 

or charges imposed on the account for 

paying checks or other items when there 

are insufficient or unavailable funds and 

the account becomes overdrawn, using 

the term ‘‘Total Overdraft Fees;’’ and 

(ii) The total dollar amount for all fees 

or charges imposed on the account for 

returning items unpaid. 

(2) Totals required. The disclosures 

required by paragraph (a)(1) of this 

section must be provided for the 

statement period and for the calendar 

year-to-date; 

(3) Format requirements. The 

aggregate fee disclosures required by 

paragraph (a) of this section must be 

disclosed in close proximity to fees 

identified under § 1030.6(a)(3), using a 

format substantially similar to Sample 

Form B–10 in Appendix B to this part. 

(b) Advertising disclosures for 

overdraft services. (1) Disclosures. 

Except as provided in paragraphs (b)(2) 

through (4) of this section, any 

advertisement promoting the payment 

of overdrafts shall disclose in a clear 

and conspicuous manner: 

(i) The fee or fees for the payment of 

each overdraft; 

(ii) The categories of transactions for 

which a fee for paying an overdraft may 

be imposed; 

(iii) The time period by which the 

consumer must repay or cover any 

overdraft; and 

(iv) The circumstances under which 

the institution will not pay an overdraft. 

(2) Communications about the 

payment of overdrafts not subject to 

additional advertising disclosures. 

Paragraph (b)(1) of this section does not 

apply to: 

(i) An advertisement promoting a 

service where the institution’s payment 

of overdrafts will be agreed upon in 

writing and subject to Regulation Z (12 

CFR Part 1026); 

(ii) A communication by an 

institution about the payment of 

overdrafts in response to a consumerinitiated inquiry about deposit accounts 

or overdrafts. Providing information 

about the payment of overdrafts in 


TKELLEY on DSK3SPTVN1PROD with RULES_2
Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 79283 

response to a balance inquiry made 

through an automated system, such as a 

telephone response machine, ATM, or 

an institution’s Internet site, is not a 

response to a consumer-initiated inquiry 

for purposes of this paragraph; 

(iii) An advertisement made through 

broadcast or electronic media, such as 

television or radio; 

(iv) An advertisement made on 

outdoor media, such as billboards; 

(v) An ATM receipt; 

(vi) An in-person discussion with a 

consumer; 

(vii) Disclosures required by federal or 

other applicable law; 

(viii) Information included on a 

periodic statement or a notice informing 

a consumer about a specific overdrawn 

item or the amount the account is 

overdrawn; 

(ix) A term in a deposit account 

agreement discussing the institution’s 

right to pay overdrafts; 

(x) A notice provided to a consumer, 

such as at an ATM, that completing a 

requested transaction may trigger a fee 

for overdrawing an account, or a general 

notice that items overdrawing an 

account may trigger a fee; 

(xi) Informational or educational 

materials concerning the payment of 

overdrafts if the materials do not 

specifically describe the institution’s 

overdraft service; or 

(xii) An opt-out or opt-in notice 

regarding the institution’s payment of 

overdrafts or provision of discretionary 

overdraft services. 

(3) Exception for ATM screens and 

telephone response machines. The 

disclosures described in paragraphs 

(b)(1)(ii) and (iv) of this section are not 

required in connection with any 

advertisement made on an ATM screen 

or using a telephone response machine. 

(4) Exception for indoor signs. 

Paragraph (b)(1) of this section does not 

apply to advertisements for the payment 

of overdrafts on indoor signs as 

described by § 1030.8(e)(2) of this part, 

provided that the sign contains a clear 

and conspicuous statement that fees 

may apply and that consumers should 

contact an employee for further 

information about applicable fees and 

terms. For purposes of this paragraph 

(b)(4), an indoor sign does not include 

an ATM screen. 

(c) Disclosure of account balances. If 

an institution discloses balance 

information to a consumer through an 

automated system, the balance may not 

include additional amounts that the 

institution may provide to cover an item 

when there are insufficient or 

unavailable funds in the consumer’s 

account, whether under a service 

provided in its discretion, a service 

subject to Regulation Z (12 CFR part 

1026), or a service to transfer funds from 

another account of the consumer. The 

institution may, at its option, disclose 

additional account balances that include 

such additional amounts, if the 

institution prominently state s that any 

such balance includes such additional 

amounts and, if applicable, that 

additional amounts are not available for 

all transactions. 

Appendix A to Part 1030—Annual 

Percentage Yield Calculation 

The annual percentage yield measures the 

total amount of interest paid on an account 

based on the interest rate and the frequency 

of compounding. The annual percentage 

yield reflects only interest and does not 

include the value of any bonus (or other 

consideration worth $10 or less) that may be 

provided to the consumer 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. The annual 

percentage yield is expressed as an 

annualized rate, based on a 365-day year. 

Institutions may calculate the annual 

percentage yield based on a 365-day or a 366- 

day year in a leap year. Part I of this 

appendix discusses the annual percentage 

yield calculations for account disclosures 

and advertisements, while Part II discusses 

annual percentage yield earned calculations 

for periodic statements. 

Part I. Annual Percentage Yield for Account 

Disclosures and Advertising Purposes 

In general, the annual percentage yield for 

account disclosures under §§ 1030.4 and 

1030.5 and for advertising under § 1030.8 is 

an annualized rate that reflects the 

relationship between the amount of interest 

that would be earned by the consumer for the 

term of the account and the amount of 

principal used to calculate that interest. 

Special rules apply to accounts with tiered 

and stepped interest rates, and to certain time 

accounts with a stated maturity greater than 

one year. 

A. General Rules 

Except as provided in Part I.E. of this 

appendix, the annual percentage yield shall 

be calculated by the formula shown below. 

Institutions shall calculate the annual 

percentage yield based on the actual number 

of days in the term of the account. For 

accounts without a stated maturity date (such 

as a typical savings or transaction account), 

the calculation shall be based on an assumed 

term of 365 days. In determining the total 

interest figure to be used in the formula, 

institutions shall assume that all principal 

and interest remain on deposit for the entire 

term and that no other transactions (deposits 

or withdrawals) occur during the term. This 

assumption shall not be used if an institution 

requires, as a condition of the account, that 

consumers withdraw interest during the 

term. In such a case, the interest (and annual 

percentage yield calculation) shall reflect that 

requirement. For time accounts that are 

offered in multiples of months, institutions 

may base the number of days on either the 

actual number of days during the applicable 

period, or the number of days that would 

occur for any actual sequence of that many 

calendar months. If institutions choose to use 

the latter rule, they must use the same 

number of days to calculate the dollar 

amount of interest earned on the account that 

is used in the annual percentage yield 

formula (where ‘‘Interest’’ is divided by 

‘‘Principal’’). 

The annual percentage yield is calculated 

by use of the following general formula 

(‘‘APY’’ is used for convenience in the 

formulas): 

APY = 100 [(1 + Interest/Principal)(365/Days 

in term)¥1] 

‘‘Principal’’ is the amount of funds 

assumed to have been deposited at the 

beginning of the account. 

‘‘Interest’’ is the total dollar amount of 

interest earned on the Principal for the term 

of the account. 

‘‘Days in term’’ is the actual number of 

days in the term of the account. When the 

‘‘days in term’’ is 365 (that is, where the 

stated maturity is 365 days or where the 

account does not have a stated maturity), the 

annual percentage yield can be calculated by 

use of the following simple formula: 

APY=100 (Interest/Principal) 

Examples 

(1) If an institution pays $61.68 in interest 

for a 365-day year on $1,000 deposited into 

a NOW account, using the general formula 

above, the annual percentage yield is 6.17%: 

APY = 100 [(1 + 61.68/1,000) (365/365) ¥ 1] 

APY = 6.17% 

Or, using the simple formula above (since, 

as an account without a stated term, the term 

is deemed to be 365 days): 

APY = 100 (61.68/1,000) 

APY = 6.17% 

(2) If an institution pays $30.37 in interest 

on a $1,000 six-month certificate of deposit 

(where the six-month period used by the 

institution contains 182 days), using the 

general formula above, the annual percentage 

yield is 6.18%: 

APY = 100 [(1 + 30.37/1,000) (365/182)¥1] 

APY = 6.18% 

B. Stepped-Rate Accounts (Different Rates 

Apply in Succeeding Periods) 

For accounts with two or more interest 

rates applied in succeeding periods (where 

the rates are known at the time the account 

is opened), an institution shall assume each 

interest rate is in effect for the length of time 

provided for in the deposit contract. 

Examples 

(1) If an institution offers a $1,000 6-month 

certificate of deposit on which it pays a 5% 

interest rate, compounded daily, for the first 

three months (which contain 91 days), and a 

5.5% interest rate, compounded daily, for the 

next three months (which contain 92 days), 

the total interest for six months is $26.68 

and, using the general formula above, the 

annual percentage yield is 5.39%: 

APY = 100 [(1 + 26.68/1,000) (365/183) ¥ 1] 

APY = 5.39% 


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(2) If an institution offers a $1,000 two-year 

certificate of deposit on which it pays a 6% 

interest rate, compounded daily, for the first 

year, and a 6.5% interest rate, compounded 

daily, for the next year, the total interest for 

two years is $133.13, and, using the general 

formula above, the annual percentage yield is 

6.45%: 

APY = 100 [(1 + 133.13/1,000) (365/730) ¥ 

1] 

APY = 6.45% 

C. Variable-Rate Accounts 

For variable-rate accounts without an 

introductory premium or discounted rate, an 

institution must base the calculation only on 

the initial interest rate in effect when the 

account is opened (or advertised), and 

assume that this rate will not change during 

the year. 

Variable-rate accounts with an 

introductory premium (or discount) rate must 

be calculated like a stepped-rate account. 

Thus, an institution shall assume that: (1) 

The introductory interest rate is in effect for 

the length of time provided for in the deposit 

contract; and (2) the variable interest rate that 

would have been in effect when the account 

is opened or advertised (but for the 

introductory rate) is in effect for the 

remainder of the year. If the variable rate is 

tied to an index, the index-based rate in 

effect at the time of disclosure must be used 

for the remainder of the year. If the rate is 

not tied to an index, the rate in effect for 

existing consumers holding the same account 

(who are not receiving the introductory 

interest rate) must be used for the remainder 

of the year. 

For example, if an institution offers an 

account on which it pays a 7% interest rate, 

compounded daily, for the first three months 

(which, for example, contain 91 days), while 

the variable interest rate that would have 

been in effect when the account was opened 

was 5%, the total interest for a 365-day year 

for a $1,000 deposit is $56.52 (based on 91 

days at 7% followed by 274 days at 5%). 

Using the simple formula, the annual 

percentage yield is 5.65%: 

APY = 100 (56.52/1,000) 

APY = 5.65% 

D. Tiered-Rate Accounts (Different Rates 

Apply to Specified Balance Levels) 

For accounts in which two or more interest 

rates paid on the account are applicable to 

specified balance levels, the institution must 

calculate the annual percentage yield in 

accordance with the method described below 

that it uses to calculate interest. In all cases, 

an annual percentage yield (or a range of 

annual percentage yields, if appropriate) 

must be disclosed for each balance tier. 

For purposes of the examples discussed 

below, assume the following: 

Interest rate 

(percent) Deposit balance required to earn rate 

5.25 ........................................................................................................................................................ Up to but not exceeding $2,500. 

5.50 ........................................................................................................................................................ Above $2,500 but not exceeding $15,000. 

5.75 ........................................................................................................................................................ Above $15,000. 

Tiering Method A. Under this method, an 

institution pays on the full balance in the 

account the stated interest rate that 

corresponds to the applicable deposit tier. 

For example, if a consumer deposits $8,000, 

the institution pays the 5.50% interest rate 

on the entire $8,000. 

When this method is used to determine 

interest, only one annual percentage yield 

will apply to each tier. Within each tier, the 

annual percentage yield will not vary with 

the amount of principal assumed to have 

been deposited. 

For the interest rates and deposit balances 

assumed above, the institution will state 

three annual percentage yields—one 

corresponding to each balance tier. 

Calculation of each annual percentage yield 

is similar for this type of account as for 

accounts with a single interest rate. Thus, the 

calculation is based on the total amount of 

interest that would be received by the 

consumer for each tier of the account for a 

year and the principal assumed to have been 

deposited to earn that amount of interest. 

First tier. Assuming daily compounding, 

the institution will pay $53.90 in interest on 

a $1,000 deposit. Using the general formula, 

for the first tier, the annual percentage yield 

is 5.39%: 

APY = 100 [(1 + 53.90/1,000) (365/365) ¥ 1] 

APY = 5.39% 

Using the simple formula: 

APY = 100 (53.90/1,000) 

APY = 5.39% 

Second tier. The institution will pay 

$452.29 in interest on an $8,000 deposit. 

Thus, using the simple formula, the annual 

percentage yield for the second tier is 5.65%: 

APY = 100 (452.29/8,000) 

APY = 5.65% 

Third tier. The institution will pay 

$1,183.61 in interest on a $20,000 deposit. 

Thus, using the simple formula, the annual 

percentage yield for the third tier is 5.92%: 

APY = 100 (1,183.61/20,000) 

APY = 5.92% 

Tiering Method B. Under this method, an 

institution pays the stated interest rate only 

on that portion of the balance within the 

specified tier. For example, if a consumer 

deposits $8,000, the institution pays 5.25% 

on $2,500 and 5.50% on $5,500 (the 

difference between $8,000 and the first tier 

cut-off of $2,500). 

The institution that computes interest in 

this manner must provide a range that shows 

the lowest and the highest annual percentage 

yields for each tier (other than for the first 

tier, which, like the tiers in Method A, has 

the same annual percentage yield 

throughout). The low figure for an annual 

percentage yield range is calculated based on 

the total amount of interest earned for a year 

assuming the minimum principal required to 

earn the interest rate for that tier. The high 

figure for an annual percentage yield range is 

based on the amount of interest the 

institution would pay on the highest 

principal that could be deposited to earn that 

same interest rate. If the account does not 

have a limit on the maximum amount that 

can be deposited, the institution may assume 

any amount. 

For the tiering structure assumed above, 

the institution would state a total of five 

annual percentage yields—one figure for the 

first tier and two figures stated as a range for 

the other two tiers. 

First tier. Assuming daily compounding, 

the institution would pay $53.90 in interest 

on a $1,000 deposit. For this first tier, using 

the simple formula, the annual percentage 

yield is 5.39%: 

APY = 100 (53.90/1,000) 

APY = 5.39% 

Second tier. For the second tier, the 

institution would pay between $134.75 and 

$841.45 in interest, based on assumed 

balances of $2,500.01 and $15,000, 

respectively. For $2,500.01, interest would be 

figured on $2,500 at 5.25% interest rate plus 

interest on $.01 at 5.50%. For the low end 

of the second tier, therefore, the annual 

percentage yield is 5.39%, using the simple 

formula: 

APY = 100 (134.75/2,500) 

APY = 5.39% 

For $15,000, interest is figured on $2,500 

at 5.25% interest rate plus interest on 

$12,500 at 5.50% interest rate. For the high 

end of the second tier, the annual percentage 

yield, using the simple formula, is 5.61%: 

APY = 100 (841.45/15,000) 

APY = 5.61% 

Thus, the annual percentage yield range for 

the second tier is 5.39% to 5.61%. 

Third tier. For the third tier, the institution 

would pay $841.45 in interest on the low end 

of the third tier (a balance of $15,000.01). For 

$15,000.01, interest would be figured on 

$2,500 at 5.25% interest rate, plus interest on 

$12,500 at 5.50% interest rate, plus interest 

on $.01 at 5.75% interest rate. For the low 

end of the third tier, therefore, the annual 

percentage yield (using the simple formula) 

is 5.61%: 

APY = 100 (841.45/15,000) 

APY = 5.61% 

Since the institution does not limit the 

account balance, it may assume any 

maximum amount for the purposes of 

computing the annual percentage yield for 

the high end of the third tier. For an assumed 

maximum balance amount of $100,000, 

interest would be figured on $2,500 at 5.25% 

interest rate, plus interest on $12,500 at 

5.50% interest rate, plus interest on $85,000 

at 5.75% interest rate. For the high end of the 


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third tier, therefore, the annual percentage 

yield, using the simple formula, is 5.87%. 

APY = 100 (5,871.79/100,000) 

APY = 5.87% 

Thus, the annual percentage yield range 

that would be stated for the third tier is 

5.61% to 5.87%. 

If the assumed maximum balance amount 

is $1,000,000 instead of $100,000, the 

institution would use $985,000 rather than 

$85,000 in the last calculation. In that case, 

for the high end of the third tier the annual 

percentage yield, using the simple formula, is 

5.91%: 

APY = 100 (59,134.22/1,000,000) 

APY = 5.91% 

Thus, the annual percentage yield range 

that would be stated for the third tier is 

5.61% to 5.91%. 

E. Time Accounts With a Stated Maturity 

Greater Than One Year That Pay Interest at 

Least Annually 

1. For time accounts with a stated maturity 

greater than one year that do not compound 

interest on an annual or more frequent basis, 

and that require the consumer to withdraw 

interest at least annually, the annual 

percentage yield may be disclosed as equal 

to the interest rate. 

Example 

(1) If an institution offers a $1,000 two-year 

certificate of deposit that does not compound 

and that pays out interest semi-annually by 

check or transfer at a 6.00% interest rate, the 

annual percentage yield may be disclosed as 

6.00%. 

(2) For time accounts covered by this 

paragraph that are also stepped-rate accounts, 

the annual percentage yield may be disclosed 

as equal to the composite interest rate. 

Example 

(1) If an institution offers a $1,000 threeyear certificate of deposit that does not 

compound and that pays out interest 

annually by check or transfer at a 5.00% 

interest rate for the first year, 6.00% interest 

rate for the second year, and 7.00% interest 

rate for the third year, the institution may 

compute the composite interest rate and APY 

as follows: 

(a) Multiply each interest rate by the 

number of days it will be in effect; 

(b) Add these figures together; and 

(c) Divide by the total number of days in 

the term. 

(2) Applied to the example, the products of 

the interest rates and days the rates are in 

effect are (5.00% × 365 days) 1825, (6.00% 

× 365 days) 2190, and (7.00% × 365 days) 

2555, respectively. The sum of these 

products, 6570, is divided by 1095, the total 

number of days in the term. The composite 

interest rate and APY are both 6.00%. 

Part II. Annual Percentage Yield Earned for 

Periodic Statements 

The annual percentage yield earned for 

periodic statements under § 1030.6(a) is an 

annualized rate that reflects the relationship 

between the amount of interest actually 

earned on the consumer’s account during the 

statement period and the average daily 

balance in the account for the statement 

period. Pursuant to § 1030.6(b), however, if 

an institution uses the average daily balance 

method and calculates interest for a period 

other than the statement period, the annual 

percentage yield earned shall reflect the 

relationship between the amount of 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 following formulas 

(‘‘APY Earned’’ is used for convenience in 

the formulas): 

A. General Formula 

APY Earned = 100 [(1 + Interest earned/ 

Balance) (365/Days in period) ¥ 1] 

‘‘Balance’’ is the average daily balance in the 

account for the period. 

‘‘Interest earned’’ is the actual amount of 

interest earned on the account for the 

period. 

‘‘Days in period’’ is the actual number of 

days for the period. 

Examples 

(1) Assume an institution calculates 

interest for the statement period (and uses 

either the daily balance or the average daily 

balance method), and the account has a 

balance of $1,500 for 15 days and a balance 

of $500 for the remaining 15 days of a 30- 

day statement period. The average daily 

balance for the period is $1,000. The interest 

earned (under either balance computation 

method) is $5.25 during the period. The 

annual percentage yield earned (using the 

formula above) is 6.58%: 

APY Earned = 100 [(1 + 5.25/1,000) (365/30) 

¥ 1] 

APY Earned = 6.58% 

(2) Assume an institution calculates 

interest on the average daily balance for the 

calendar month and provides periodic 

statements that cover the period from the 

16th of one month to the 15th of the next 

month. The account has a balance of $2,000 

September 1 through September 15 and a 

balance of $1,000 for the remaining 15 days 

of September. The average daily balance for 

the month of September is $1,500, which 

results in $6.50 in interest earned for the 

month. The annual percentage yield earned 

for the month of September would be shown 

on the periodic statement covering 

September 16 through October 15. The 

annual percentage yield earned (using the 

formula above) is 5.40%: 

APY Earned = 100 [(6.50/1,500) (365/30) ¥ 

1] 

APY Earned = 5.40% 

(3) Assume an institution calculates 

interest on the average daily balance for a 

quarter (for example, the calendar months of 

September through November), and provides 

monthly periodic statements covering 

calendar months. The account has a balance 

of $1,000 throughout the 30 days of 

September, a balance of $2,000 throughout 

the 31 days of October, and a balance of 

$3,000 throughout the 30 days of November. 

The average daily balance for the quarter is 

$2,000, which results in $21 in interest 

earned for the quarter. The annual percentage 

yield earned would be shown on the periodic 

statement for November. The annual 

percentage yield earned (using the formula 

above) is 4.28%: 

APY Earned = 100 [(1 + 21/2,000) (365/91) 

¥ 1] 

APY Earned = 4.28% 

B. Special Formula for Use Where Periodic 

Statement Is Sent More Often Than the 

Period for Which Interest Is Compounded 

Institutions that use the daily balance 

method to accrue interest and that issue 

periodic statements more often than the 

period for which interest is compounded 

shall use the following special formula: 

The following definition applies for use in 

this formula (all other terms are defined 

under Part II): 

‘‘Compounding’’ is the number of days in 

each compounding period. 

Assume an institution calculates interest 

for the statement period using the daily 

balance method, pays a 5.00% interest rate, 

compounded annually, and provides 

periodic statements for each monthly cycle. 

The account has a daily balance of $1,000 for 

a 30-day statement period. The interest 

earned is $4.11 for the period, and the annual 

percentage yield earned (using the special 

formula above) is 5.00%: 


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APY Earned = 5.00% 

Appendix B to Part 1030—Model 

Clauses and Sample Forms 

Table of Contents 

B–1—Model Clauses for Account Disclosures 

(Section 1030.4(b)) 

B–2—Model Clauses for Change in Terms 

(Section 1030.5(a)) 

B–3—Model Clauses for Pre-Maturity Notices 

for Time Accounts (Section 1030.5(b)(2) 

and 1030.5(d)) 

B–4—Sample Form (Multiple Accounts) 

B–5—Sample Form (Now Account) 

B–6—Sample Form (Tiered Rate Money 

Market Account) 

B–7—Sample Form (Certificate of Deposit) 

B–8—Sample Form (Certificate of Deposit 

Advertisement) 

B–9—Sample Form (Money Market Account 

Advertisement) 

B–10—Sample Form (Aggregate Overdraft 

and Returned Item Fees) 

B–1—Model Clauses for Account Disclosures 

(a) Rate Information 

(i) Fixed-Rate Accounts 

The interest rate on your account is __% 

with an annual percentage yield of __%. You 

will be paid this rate [for (time period)/until 

(date)/for at least 30 calendar days]. 

(ii) Variable-Rate Accounts 

The interest rate on your account is __% 

with an annual percentage yield of __%. 

Your interest rate and annual percentage 

yield may change. 

Determination of Rate 

The interest rate on your account is based 

on (name of index) [plus/minus a margin of 

__]; or 

At our discretion, we may change the 

interest rate on your account. 

Frequency of Rate Changes 

We may change the interest rate on your 

account [every (time period)/at any time]. 

Limitations on Rate Changes 

The interest rate for your account will 

never change by more than __% each (time 

period). 

The interest rate will never be [less/more] 

than __%; or 

The interest rate will never [exceed__% 

above/drop more than __% below] the 

interest rate initially disclosed to you. 

(iii) Stepped-Rate Accounts 

The initial interest rate for your account is 

__%. You will be paid this rate [for (time 

period)/until (date)]. After that time, the 

interest rate for your account will be __%, 

and you will be paid this rate [for (time 

period)/until (date)]. The annual percentage 

yield for your account is __%. 

(iv) Tiered-Rate Accounts 

Tiering Method A 

• If your [daily balance/average daily 

balance] is $__ or more, the interest rate paid 

on the entire balance in your account will be 

__% with an annual percentage yield of __%. 

• If your [daily balance/average daily 

balance] is more than $__, but less than $__, 

the interest rate paid on the entire balance in 

your account will be __% with an annual 

percentage yield of __%. 

• If your [daily balance/average daily 

balance] is $__ or less, the interest rate paid 

on the entire balance will be __% with an 

annual percentage yield of __%. 

Tiering Method B 

• An interest rate of __% will be paid only 

for that portion of your [daily balance/ 

average daily balance] that is greater than 

$__. The annual percentage yield for this tier 

will range from __% to __%, depending on 

the balance in the account. 

• An interest rate of ll% will be paid 

only for that portion of your [daily balance/ 

average daily balance] that is greater than 

$ll. The annual percentage yield for this 

tier will range from ll% to ll%, 

depending on the balance in the account. 

• If your [daily balance/average daily 

balance] is $ll or less, the interest rate paid 

on the entire balance will be ll% with an 

annual percentage yield of ll%. 

(b) Compounding and Crediting 

(i) Frequency 

Interest will be compounded [on a ll 

basis/every (time period)]. Interest will be 

credited to your account [on a ll basis/ 

every (time period)]. 

(ii) Effect of Closing an Account 

If you close your account before interest is 

credited, you will not receive the accrued 

interest. 

(c) Minimum Balance Requirements 

(i) To Open the Account 

You must deposit $ll to open this 

account. 

(ii) To Avoid Imposition of Fees 

A minimum balance fee of $ll will be 

imposed every (time period) if the balance in 

the account falls below $ll any day of the 

(time period). 

A minimum balance fee of $ll will be 

imposed every (time period) if the average 

daily balance for the (time period) falls below 

$ll. 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 of days in 

the period. 

(iii) To Obtain the Annual Percentage Yield 

Disclosed 

You must maintain a minimum balance of 

$ll in the account each day to obtain the 

disclosed annual percentage yield. 

You must maintain a minimum average 

daily balance of $ll to obtain the disclosed 

annual percentage yield. 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 of days in 

the period. 

(d) Balance Computation Method 

(i) Daily Balance Method 

We use the daily balance method to 

calculate the interest on your account. This 

method applies a daily periodic rate to the 

principal in the account each day. 

(ii) Average Daily Balance Method 

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 of days in the period. 

(e) Accrual of Interest on Noncash Deposits 

Interest begins to accrue no later than the 

business day we receive credit for the deposit 

of noncash items (for example, checks); or 

Interest begins to accrue on the business 

day you deposit noncash items (for example, 

checks). 

(f) Fees 

The following fees may be assessed against 

your account: 

ll$ll 

ll$ll 

ll$ll 

ll(conditions for imposing fee) $ll 

ll% of ll. 

(g) Transaction Limitations 

The minimum amount you may 

[withdraw/write a check for] is $ll. 

You may make ll [deposits into/ 

withdrawals from] your account each (time 

period). 

You may not make [deposits into/ 

withdrawals from] your account until the 

maturity date. 

(h) Disclosures Relating to Time Accounts 

(i) Time Requirements 

Your account will mature on (date). 

Your account will mature in (time period). 

(ii) Early Withdrawal Penalties 

We [will/may] impose a penalty if you 

withdraw [any/all] of the [deposited funds/ 

principal] before the maturity date. The fee 

imposed will equal ll days/week[s]/ 

month[s] of interest; or 

We [will/may] impose a penalty of $ll 

if you withdraw [any/all] of the [deposited 

funds/principal] before the maturity date. 

If you withdraw some of your funds before 

maturity, the interest rate for the remaining 

funds in your account will be ll% with an 

annual percentage yield of ll%. 

(iii) Withdrawal of Interest Prior to Maturity 

The annual percentage yield assumes 

interest will remain on deposit until 

maturity. A withdrawal will reduce earnings. 

(iv) Renewal Policies 

(1) Automatically Renewable Time Accounts 

This account will automatically renew at 

maturity. 

You will have [ll calendar/business] 

days after the maturity date to withdraw 

funds without penalty; or 

There is no grace period following the 

maturity of this account to withdraw funds 

without penalty. 

(2) Non-Automatically Renewable Time 

Accounts 

This account will not renew automatically 

at maturity. If you do not renew the account, 


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your deposit will be placed in [an interestbearing/a noninterest-bearing] account. 

(v) Required Interest Distribution 

This account requires the distribution of 

interest and does not allow interest to remain 

in the account. 

(i) Bonuses 

You will [be paid/receive] [$lll 

(description of item)] as a bonus [when you 

open the account/on (date) ll].s 

You must maintain a minimum [daily 

balance/average daily balance] of $ll to 

obtain the bonus. 

To earn the bonus, [$ll/your entire 

principal] must remain on deposit [for (time 

period)/until (date)ll]. 

B–2—Model Clauses for Change in Terms 

On (date), the cost of (type of fee) will 

increase to $ll. 

On (date), the interest rate on your account 

will decrease to ll% with an annual 

percentage yield of ll%. 

On (date), the minimum [daily balance/ 

average daily balance] required to avoid 

imposition of a fee will increase to $ll. 

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 

Your account will mature on (date). 

If the account renews, the new maturity 

date will be (date). 

The interest rate for the renewed account 

will be ll% with an annual percentage 

yield of ll%; or 

The interest rate and annual percentage 

yield have not yet been determined. They 

will be available on (date). Please call (phone 

number) to learn the interest rate and annual 

percentage yield for your new account. 

(b) Non-Automatically Renewable Time 

Accounts With Maturities Longer Than One 

Year 

Your account will mature on (date). 

If you do not renew the account, interest 

[will/will not] be paid after maturity. 

BILLING CODE 4810–AM–P 


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BILLING CODE 4810–AM–C 


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Appendix C to Part 1030—Effect on 

State Laws 

(a) Inconsistent Requirements 

State law requirements that are 

inconsistent with the requirements of the act 

and this part are preempted to the extent of 

the inconsistency. A state law is inconsistent 

if it requires a depository institution to make 

disclosures or take actions that contradict the 

requirements of the federal law. A state law 

is also contradictory if it requires the use of 

the same term to represent a different amount 

or a different meaning than the federal law, 

requires the use of a term different from that 

required in the federal law to describe the 

same item, or permits a method of calculating 

interest on an account different from that 

required in the federal law. 

(b) Preemption Determinations 

A depository institution, state, or other 

interested party may request the Bureau to 

determine whether a state law requirement is 

inconsistent with the federal requirements. A 

request for a determination shall be in 

writing and addressed to the Bureau of 

Consumer Financial Protection, 1700 G Street 

NW., Washington, DC 20006. Notice that the 

Bureau intends to make a determination 

(either on request or on its own motion) will 

be published in the Federal Register, with an 

opportunity for public comment unless the 

Bureau finds that notice and opportunity for 

comment would be impracticable, 

unnecessary, or contrary to the public 

interest and publishes its reasons for such 

decision. Notice of a final determination will 

be published in the Federal Register and 

furnished to the party who made the request 

and to the appropriate state official. 

(c) Effect of Preemption Determinations 

After the Bureau determines that a state 

law is inconsistent, a depository institution 

may not make disclosures using the 

inconsistent term or take actions relying on 

the inconsistent law. 

(d) Reversal of Determination 

The Bureau reserves the right to reverse a 

determination for any reason bearing on the 

coverage or effect of state or federal law. 

Notice of reversal of a determination will be 

published in the Federal Register and a copy 

furnished to the appropriate state official. 

Appendix D to Part 1030—Issuance of 

Official Interpretations 

Except in unusual circumstances, 

interpretations will not be issued separately 

but will be incorporated in an official 

commentary to this part, which will be 

amended periodically. No interpretations 

will be issued approving depository 

institutions’ forms, statements, or calculation 

tools or methods. 

Supplement I to Part 1030—Official 

Interpretations 

Introduction 

1. Official status. This commentary is the 

means by which the Bureau of Consumer 

Financial Protection issues official 

interpretations of Regulation DD. 

Section 1030.1 Authority, purpose, coverage, 

and effect on state laws 

(c) Coverage 

1. Foreign applicability. Regulation DD 

applies to all depository institutions, except 

credit unions, that offer deposit accounts to 

residents (including resident aliens) of any 

state as defined in § 1030.2(r). Accounts held 

in an institution located in a state are 

covered, even if funds are transferred 

periodically to a location outside the United 

States. Accounts held in an institution 

located outside the United States are not 

covered, even if held by a U.S. resident. 

2. Persons who advertise accounts. Persons 

who advertise accounts are subject to the 

advertising rules. For example, if a deposit 

broker places an advertisement offering 

consumers an interest in an account at a 

depository institution, the advertising rules 

apply to the advertisement, whether the 

account is to be held by the broker or directly 

by the consumer. 

Section 1030.2—Definitions 

(a) Account. 

1. Covered accounts. Examples of accounts 

subject to the regulation are: 

i. Interest-bearing and noninterest-bearing 

accounts. 

ii. Deposit accounts opened as a condition 

of obtaining a credit card. 

iii. Accounts denominated in a foreign 

currency. 

iv. Individual retirement accounts (IRAs) 

and simplified employee pension (SEP) 

accounts. 

v. Payable on death (POD) or ‘‘Totten trust’’ 

accounts. 

2. Other accounts. Examples of accounts 

not subject to the regulation are: 

i. Mortgage escrow accounts for collecting 

taxes and property insurance premiums. 

ii. Accounts established to make periodic 

disbursements on construction loans. 

iii. Trust accounts opened by a trustee 

pursuant to a formal written trust agreement 

(not merely declarations of trust on a 

signature card such as a ‘‘Totten trust,’’ or an 

IRA and SEP account). 

iv. Accounts opened by an executor in the 

name of a decedent’s estate. 

3. Other investments. The term ‘‘account’’ 

does not apply to all products of a depository 

institution. Examples of products not covered 

are: 

i. Government securities. 

ii. Mutual funds. 

iii. Annuities. 

iv. Securities or obligations of a depository 

institution. 

v. Contractual arrangements such as 

repurchase agreements, interest rate swaps, 

and bankers acceptances. 

(b) Advertisement. 

1. Covered messages. Advertisements 

include commercial messages in visual, oral, 

or print media that invite, offer, or otherwise 

announce generally to prospective customers 

the availability of consumer accounts—such 

as: 

i. Telephone solicitations. 

ii. Messages on automated teller machine 

(ATM) screens. 

iii. Messages on a computer screen in an 

institution’s lobby (including any printout) 

other than a screen viewed solely by the 

institution’s employee. 

iv. Messages in a newspaper, magazine, or 

promotional flyer or on radio. 

v. Messages that are provided along with 

information about the consumer’s existing 

account and that promote another account at 

the institution. 

2. Other messages. Examples of messages 

that are not advertisements are: 

i. Rate sheets in a newspaper, periodical, 

or trade journal (unless the depository 

institution, or a deposit broker offering 

accounts at the institution, pays a fee for or 

otherwise controls publication). 

ii. In-person discussions with consumers 

about the terms for a specific account. 

iii. For purposes of § 1030.8(b) of this part 

through § 1030.8(e) of this part, information 

given to consumers about existing accounts, 

such as current rates recorded on a voiceresponse machine or notices for 

automatically renewable time account sent 

before renewal. 

iv. Information about a particular 

transaction in an existing account. 

v. Disclosures required by federal or other 

applicable law. 

vi. A deposit account agreement. 

(f) Bonus. 

1. Examples. Bonuses include items of 

value, other than interest, offered as 

incentives to consumers, such as an offer to 

pay the final installment deposit for a 

holiday club account. Items that are not a 

bonus include discount coupons for goods or 

services at restaurants or stores. 

2. De minimis rule. Items with a de 

minimis value of $10 or less are not bonuses. 

Institutions may rely on the valuation 

standard used by the Internal Revenue 

Service to determine if the value of the item 

is de minimis. Examples of items of de 

minimis value are: 

i. Disability insurance premiums valued at 

an amount of $10 or less per year. 

ii. Coffee mugs, T-shirts or other 

merchandise with a market value of $10 or 

less. 

3. Aggregation. In determining if an item 

valued at $10 or less is a bonus, institutions 

must aggregate per account per calendar year 

items that may be given to consumers. In 

making this determination, institutions 

aggregate per account only the market value 

of items that may be given for a specific 

promotion. To illustrate, assume an 

institution offers in January to give 

consumers an item valued at $7 for each 

calendar quarter during the year that the 

average account balance in a negotiable order 

of withdrawal (NOW) account exceeds 

$10,000. The bonus rules are triggered, since 

consumers are eligible under the promotion 

to receive up to $28 during the year. 

However, the bonus rules are not triggered if 

an item valued at $7 is offered to consumers 

opening a NOW account during the month of 

January, even though in November the 

institution introduces a new promotion that 

includes, for example, an offer to existing 

NOW account holders for an item valued at 

$8 for maintaining an average balance of 

$5,000 for the month. 

4. Waiver or reduction of a fee or 

absorption of expenses. Bonuses do not 


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include value that consumers receive through 

the waiver or reduction of fees (even if the 

fees waived exceed $10) for banking-related 

services such as the following: 

i. A safe deposit box rental fee for 

consumers who open a new account. 

ii. Fees for travelers checks for account 

holders. 

iii. Discounts on interest rates charged for 

loans at the institution. 

(h) Consumer. 

1. Professional capacity. Examples of 

accounts held by a natural person in a 

professional capacity for another are 

attorney-client trust accounts and landlordtenant security accounts. 

2. Other accounts. Accounts not held in a 

professional capacity include accounts held 

by an individual for a child under the 

Uniform Gifts to Minors Act. 

3. Sole proprietors. Accounts held by 

individuals as sole proprietors are not 

covered. 

4. Retirement plans. IRAs and SEP 

accounts are consumer accounts to the extent 

that funds are invested in covered accounts. 

Keogh accounts are not subject to the 

regulation. 

(j) Depository institution and institution. 

1. Foreign institutions. Branches of foreign 

institutions located in the United States are 

subject to the regulation if they offer deposit 

accounts to consumers. Edge Act and 

Agreement corporations, and agencies of 

foreign institutions, are not depository 

institutions for purposes of this part. 

(k) Deposit broker. 

1. General. A deposit broker is a person 

who is in the business of placing or 

facilitating the placement of deposits in an 

institution, as defined by the Federal Deposit 

Insurance Act (12 U.S.C. 29(g)). 

(n) Interest. 

1. Relation to bonuses. Bonuses are not 

interest for purposes of this part. 

(p) Passbook savings account. 

1. Relation to Regulation E. Passbook 

savings accounts include accounts accessed 

by preauthorized electronic fund transfers to 

the account (as defined in 12 CFR 1005.2(j)), 

such as an account that receives direct 

deposit of social security payments. 

Accounts permitting access by other 

electronic means are not ‘‘passbook saving 

accounts’’ and must comply with the 

requirements of § 1030.6 if statements are 

sent four or more times a year. 

(q) Periodic statement. 

1. Examples. Periodic statements do not 

include: 

i. Additional statements provided solely 

upon request. 

ii. General service information such as a 

quarterly newsletter or other correspondence 

describing available services and products. 

(t) Tiered-rate account. 

1. Time accounts. Time accounts paying 

different rates based solely on the amount of 

the initial deposit are not tiered-rate 

accounts. 

2. Minimum balance requirements. A 

requirement to maintain a minimum balance 

to earn interest does not make an account a 

tiered-rate account. 

(u) Time account. 

1. Club accounts. Although club accounts 

typically have a maturity date, they are not 

time accounts unless they also require a 

penalty of at least seven days’ interest for 

withdrawals during the first six days after the 

account is opened. 

2. Relation to Regulation D. Regulation D 

of the Board of Governors of the Federal 

Reserve System (12 CFR part 204) permits in 

limited circumstances the withdrawal of 

funds without penalty during the first six 

days after a ‘‘time deposit’’ is opened. (See 

12 CFR 204.2(c)(1)(i).) But the fact that a 

consumer makes a withdrawal as permitted 

by Regulation D does not disqualify the 

account from being a time account for 

purposes of this part. 

(v) Variable-rate account. 

1. General. A certificate of deposit 

permitting one or more rate adjustments prior 

to maturity at the consumer’s option is a 

variable-rate account. 

Section 1030.3—General Disclosure 

Requirements 

(a) Form. 

1. Design requirements. Disclosures must 

be presented in a format that allows 

consumers to readily understand the terms of 

their account. Institutions are not required to 

use a particular type size or typeface, nor are 

institutions required to state any term more 

conspicuously than any other term. 

Disclosures may be made: 

i. In any order. 

ii. In combination with other disclosures or 

account terms. 

iii. In combination with disclosures for 

other types of accounts, as long as it is clear 

to consumers which disclosures apply to 

their account. 

iv. On more than one page and on the front 

and reverse sides. 

v. By using inserts to a document or filling 

in blanks. 

vi. On more than one document, as long as 

the documents are provided at the same time. 

2. Consistent terminology. Institutions 

must use consistent terminology to describe 

terms or features required to be disclosed. 

For example, if an institution describes a 

monthly fee (regardless of account activity) 

as a ‘‘monthly service fee’’ in accountopening disclosures, the periodic statement 

and change-in-term notices must use the 

same terminology so that consumers can 

readily identify the fee. 

(b) General. 

1. Specificity of legal obligation. 

Institutions may refer to the calendar month 

or to roughly equivalent intervals during a 

calendar year as a ‘‘month.’’ 

(c) Relation to Regulation E. 

1. General rule. Compliance with 

Regulation E (12 CFR Part 1005) is deemed 

to satisfy the disclosure requirements of this 

part, such as when: 

i. An institution changes a term that 

triggers a notice under Regulation E, and uses 

the timing and disclosure rules of Regulation 

E for sending change-in-term notices. 

ii. Consumers add an ATM access feature 

to an account, and the institution provides 

disclosures pursuant to Regulation E, 

including disclosure of fees (see 12 CFR 

1005.7.) 

iii. An institution complying with the 

timing rules of Regulation E discloses at the 

same time fees for electronic services (such 

as for balance inquiry fees at ATMs) required 

to be disclosed by this part but not by 

Regulation E. 

iv. An institution relies on Regulation E’s 

rules regarding disclosure of limitations on 

the frequency and amount of electronic fund 

transfers, including security-related 

exceptions. But any limitations on ‘‘intrainstitutional transfers’’ to or from the 

consumer’s other accounts during a given 

time period must be disclosed, even though 

intra-institutional transfers are exempt from 

Regulation E. 

(e) Oral response to inquiries. 

1. Application of rule. Institutions are not 

required to provide rate information orally. 

2. Relation to advertising. The advertising 

rules do not cover an oral response to a 

question about rates. 

3. Existing accounts. This paragraph does 

not apply to oral responses about rate 

information for existing accounts. For 

example, if a consumer holding a one-year 

certificate of deposit (CD) requests interest 

rate information about the CD during the 

term, the institution need not disclose the 

annual percentage yield. 

(f) Rounding and accuracy rules for rates 

and yields 

(f)(1) Rounding. 

1. Permissible rounding. Examples of 

permissible rounding are an annual 

percentage yield calculated to be 5.644%, 

rounded down and disclosed as 5.64%; 

5.645% rounded up and disclosed as 5.65%. 

(f)(2) Accuracy. 

1. Annual percentage yield and annual 

percentage yield earned. The tolerance for 

annual percentage yield and annual 

percentage yield earned calculations is 

designed to accommodate inadvertent errors. 

Institutions may not purposely incorporate 

the tolerance into their calculation of yields. 

Section 1030.4—Account Disclosures 

(a) Delivery of account disclosures. 

(a)(1) Account opening. 

1. New accounts. New account disclosures 

must be provided when: 

i. A time account that does not 

automatically rollover is renewed by a 

consumer. 

ii. A consumer changes a term for a 

renewable time account (see comment 5(b)– 

5 regarding disclosure alternatives.) 

iii. An institution transfers funds from an 

account to open a new account not at the 

consumer’s request, unless the institution 

previously gave account disclosures and any 

change-in-term notices for the new account. 

iv. An institution accepts a deposit from a 

consumer to an account that the institution 

had deemed closed for the purpose of 

treating accrued but uncredited interest as 

forfeited interest (see comment 7(b)–3.) 

2. Acquired accounts. New account 

disclosures need not be given when an 

institution acquires an account through an 

acquisition of or merger with another 

institution (but see § 1030.5(a) of this part 

regarding advance notice requirements if 

terms are changed). 

(a)(2) Requests. 

Paragraph (a)(2)(i). 

1. Inquiries versus requests. A response to 

an oral inquiry (by telephone or in person) 


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about rates and yields or fees does not trigger 

the duty to provide account disclosures. But 

when consumers ask for written information 

about an account (whether by telephone, in 

person, or by other means), the institution 

must provide disclosures unless the account 

is no longer offered to the public. 

2. General requests. When responding to a 

consumer’s general request for disclosures 

about a type of account (a NOW account, for 

example), an institution that offers several 

variations may provide disclosures for any 

one of them. 

3. Timing for response. Ten business days 

is a reasonable time for responding to 

requests for account information that 

consumers do not make in person, including 

requests made by electronic means (such as 

by electronic mail). 

4. Use of electronic means. If a consumer 

who is not present at the institution makes 

a request for account disclosures, including 

a request made by telephone, email, or via 

the institution’s Web site, the institution may 

send the disclosures in paper form or, if the 

consumer agrees, may provide the 

disclosures electronically, such as to an 

email address that the consumer provides for 

that purpose, or on the institution’s Web site, 

without regard to the consumer consent or 

other provisions of the E–Sign Act. The 

regulation does not require an institution to 

provide, nor a consumer to agree to receive, 

the disclosures required by § 1030.4(a)(2) in 

electronic form. 

Paragraph (a)(2)(ii)(A). 

1. Recent rates. Institutions comply with 

this paragraph if they disclose an interest rate 

and annual percentage yield accurate within 

the seven calendar days preceding the date 

they send the disclosures. 

Paragraph (a)(2)(ii)(B). 

1. Term. Describing the maturity of a time 

account as ‘‘1 year’’ or ‘‘6 months,’’ for 

example, illustrates a statement of the 

maturity of a time account as a term rather 

than a date (‘‘January 10, 1995’’). 

(b) Content of account disclosures. 

(b)(1) Rate information. 

(b)(1)(i) Annual percentage yield and 

interest rate. 

1. Rate disclosures. In addition to the 

interest rate and annual percentage yield, 

institutions may disclose a periodic rate 

corresponding to the interest rate. No other 

rate or yield (such as ‘‘tax effective yield’’) is 

permitted. If the annual percentage yield is 

the same as the interest rate, institutions may 

disclose a single figure but must use both 

terms. 

2. Fixed-rate accounts. For fixed-rate time 

accounts paying the opening rate until 

maturity, institutions may disclose the period 

of time the interest rate will be in effect by 

stating the maturity date. (See Appendix B, 

B–7—Sample Form.) For other fixed-rate 

accounts, institutions may use a date (‘‘This 

rate will be in effect through May 4, 1995’’) 

or a period (‘‘This rate will be in effect for 

at least 30 days’’). 

3. Tiered-rate accounts. Each interest rate, 

along with the corresponding annual 

percentage yield for each specified balance 

level (or range of annual percentage yields, 

if appropriate), must be disclosed for tieredrate accounts. (See Appendix A, Part I, 

Paragraph D.) 

4. Stepped-rate accounts. A single 

composite annual percentage yield must be 

disclosed for stepped-rate accounts. (See 

Appendix A, Part I, Paragraph B.) The 

interest rates and the period of time each will 

be in effect also must be provided. When the 

initial rate offered for a specified time on a 

variable-rate account is higher or lower than 

the rate that would otherwise be paid on the 

account, the calculation of the annual 

percentage yield must be made as if for a 

stepped-rate account. (See Appendix A, Part 

I, Paragraph C.) 

(b)(1)(ii) Variable rates. 

Paragraph (b)(1)(ii)(B). 

1. Determining interest rates. To disclose 

how the interest rate is determined, 

institutions must: 

i. Identify the index and specific margin, 

if the interest rate is tied to an index. 

ii. State that rate changes are within the 

institution’s discretion, if the institution does 

not tie changes to an index. 

Paragraph (b)(1)(ii)(C). 

1. Frequency of rate changes. An 

institution reserving the right to change rates 

at its discretion must state the fact that rates 

may change at any time. 

Paragraph (b)(1)(ii)(D). 

1. Limitations. A floor or ceiling on rates 

or on the amount the rate may decrease or 

increase during any time period must be 

disclosed. Institutions need not disclose the 

absence of limitations on rate changes. 

(b)(2) Compounding and crediting. 

(b)(2)(ii) Effect of closing an account. 

1. Deeming an account closed. An 

institution may, subject to state or other law, 

provide in its deposit contracts the actions by 

consumers that will be treated as closing the 

account and that will result in the forfeiture 

of accrued but uncredited interest. An 

example is the withdrawal of all funds from 

the account prior to the date that interest is 

credited. 

(b)(3) Balance information. 

(b)(3)(ii) Balance computation method. 

1. Methods and periods. Institutions may 

use different methods or periods to calculate 

minimum balances for purposes of imposing 

a fee (the daily balance for a calendar month, 

for example) and accruing interest (the 

average daily balance for a statement period, 

for example). Each method and 

corresponding period must be disclosed. 

(b)(3)(iii) When interest begins to accrue. 

1. Additional information. Institutions may 

disclose additional information such as the 

time of day after which deposits are treated 

as having been received the following 

business day, and may use additional 

descriptive terms such as ‘‘ledger’’ or 

‘‘collected’’ balances to disclose when 

interest begins to accrue. 

(b)(4) Fees. 

1. Covered fees. The following are types of 

fees that must be disclosed: 

i. Maintenance fees, such as monthly 

service fees. 

ii. Fees to open or to close an account. 

iii. Fees related to deposits or withdrawals, 

such as fees for use of the institution’s ATMs. 

iv. Fees for special services, such as stoppayment fees, fees for balance inquiries or 

verification of deposits, fees associated with 

checks returned unpaid, and fees for 

regularly sending to consumers checks that 

otherwise would be held by the institution. 

2. Other fees. Institutions need not disclose 

fees such as the following: 

i. Fees for services offered to account and 

nonaccount holders alike, such as travelers 

checks and wire transfers (even if different 

amounts are charged to account and 

nonaccount holders). 

ii. Incidental fees, such as fees associated 

with state escheat laws, garnishment or 

attorneys fees, and fees for photocopying. 

3. Amount of fees. Institutions must state 

the amount and conditions under which a fee 

may be imposed. Naming and describing the 

fee (such as ‘‘$4.00 monthly service fee’’) will 

typically satisfy these requirements. 

4. Tied-accounts. Institutions must state if 

fees that may be assessed against an account 

are tied to other accounts at the institution. 

For example, if an institution ties the fees 

payable on a NOW account to balances held 

in the NOW account and a savings account, 

the NOW account disclosures must state that 

fact and explain how the fee is determined. 

5. Fees for overdrawing an account. Under 

§ 1030.4(b)(4) of this part, institutions must 

disclose the conditions under which a fee 

may be imposed. In satisfying this 

requirement institutions must specify the 

categories of transactions for which an 

overdraft fee may be imposed. An exhaustive 

list of transactions is not required. It is 

sufficient for an institution to state that the 

fee applies to overdrafts ‘‘created by check, 

in-person withdrawal, ATM withdrawal, or 

other electronic means,’’ as applicable. 

Disclosing a fee ‘‘for overdraft items’’ would 

not be sufficient. 

(b)(5) Transaction limitations. 

1. General rule. Examples of limitations on 

the number or dollar amount of deposits or 

withdrawals that institutions must disclose 

are: 

i. Limits on the number of checks that may 

be written on an account within a given time 

period. 

ii. Limits on withdrawals or deposits 

during the term of a time account. 

iii. Limitations required by Regulation D of 

the Board of Governors of the Federal 

Reserve System (12 CFR part 204) on the 

number of withdrawals permitted from 

money market deposit accounts by check to 

third parties each month. Institutions need 

not disclose reservations of right to require 

notices for withdrawals from accounts 

required by federal or state law. 

(b)(6) Features of time accounts. 

(b)(6)(i) Time requirements. 

1. ‘‘Callable’’ time accounts. In addition to 

the maturity date, an institution must state 

the date or the circumstances under which it 

may redeem a time account at the 

institution’s option (a ‘‘callable’’ time 

account). 

(b)(6)(ii) Early withdrawal penalties. 

1. General. The term ‘‘penalty’’ may but 

need not be used to describe the loss of 

interest that consumers may incur for early 

withdrawal of funds from time accounts. 

2. Examples. Examples of early withdrawal 

penalties are: 

i. Monetary penalties, such as ‘‘$10.00’’ or 

‘‘seven days’ interest plus accrued but 

uncredited interest.’’ 


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ii. Adverse changes to terms such as a 

lowering of the interest rate, annual 

percentage yield, or compounding frequency 

for funds remaining on deposit. 

iii. Reclamation of bonuses. 

3. Relation to rules for IRAs or similar 

plans. Penalties imposed by the Internal 

Revenue Code for certain withdrawals from 

IRAs or similar pension or savings plans are 

not early withdrawal penalties for purposes 

of this part. 

4. Disclosing penalties. Penalties may be 

stated in months, whether institutions assess 

the penalty using the actual number of days 

during the period or using another method 

such as a number of days that occurs in any 

actual sequence of the total calendar months 

involved. For example, stating ‘‘one month’s 

interest’’ is permissible, whether the 

institution assesses 30 days’ interest during 

the month of April, or selects a time period 

between 28 and 31 days for calculating the 

interest for all early withdrawals regardless 

of when the penalty is assessed. 

(b)(6)(iv) Renewal policies. 

1. Rollover time accounts. Institutions 

offering a grace period on time accounts that 

automatically renew need not state whether 

interest will be paid if the funds are 

withdrawn during the grace period. 

2. Nonrollover time accounts. Institutions 

paying interest on funds following the 

maturity of time accounts that do not renew 

automatically need not state the rate (or 

annual percentage yield) that may be paid. 

(See Appendix B, Model Clause B– 

1(h)(iv)(2).) 

Section 1030.5—Subsequent Disclosures 

(a) Change in terms. 

(a)(1) Advance notice required. 

1. Form of notice. Institutions may provide 

a change-in-term notice on or with a periodic 

statement or in another mailing. If an 

institution provides notice through revised 

account disclosures, the changed term must 

be highlighted in some manner. For example, 

institutions may note that a particular fee has 

been changed (also specifying the new 

amount) or use an accompanying letter that 

refers to the changed term. 

2. Effective date. An example of language 

for disclosing the effective date of a change 

is ‘‘As of November 21, 1994.’’ 

3. Terms that change upon the occurrence 

of an event. An institution offering terms that 

will automatically change upon the 

occurrence of a stated event need not send 

an advance notice of the change provided the 

institution fully describes the conditions of 

the change in the account opening 

disclosures (and sends any change-in-term 

notices regardless of whether the changed 

term affects that consumer’s account at that 

time). 

4. Examples. Examples of changes not 

requiring an advance change-in-terms notice 

are: 

i. The termination of employment for 

consumers for whom account maintenance or 

activity fees were waived during their 

employment by the depository institution. 

ii. The expiration of one year in a 

promotion described in the account opening 

disclosures to ‘‘waive $4.00 monthly service 

charges for one year.’’ 

(a)(2) No notice required. 

(a)(2)(ii) Check printing fees. 

1. Increase in fees. A notice is not required 

for an increase in fees for printing checks (or 

deposit and withdrawal slips) even if the 

institution adds some amount to the price 

charged by the vendor. 

(b) Notice before maturity for time 

accounts longer than one month that renew 

automatically. 

1. Maturity dates on nonbusiness days. In 

determining the term of a time account, 

institutions may disregard the fact that the 

term will be extended beyond the disclosed 

number of days because the disclosed 

maturity falls on a nonbusiness day. For 

example, a holiday or weekend may cause a 

‘‘one-year’’ time account to extend beyond 

365 days (or 366, in a leap year) or a ‘‘onemonth’’ time account to extend beyond 31 

days. 

2. Disclosing when rates will be 

determined. Ways to disclose when the 

annual percentage yield will be available 

include the use of: 

i. A specific date, such as ‘‘October 28.’’ 

ii. A date that is easily determinable, such 

as ‘‘the Tuesday before the maturity date 

stated on this notice’’ or ‘‘as of the maturity 

date stated on this notice.’’ 

3. Alternative timing rule. Under the 

alternative timing rule, an institution offering 

a 10-day grace period would have to provide 

the disclosures at least 10 days prior to the 

scheduled maturity date. 

4. Club accounts. If consumers have agreed 

to the transfer of payments from another 

account to a club time account for the next 

club period, the institution must comply 

with the requirements for automatically 

renewable time accounts—even though 

consumers may withdraw funds from the 

club account at the end of the current club 

period. 

5. Renewal of a time account. In the case 

of a change in terms that becomes effective 

if a rollover time account is subsequently 

renewed: 

i. If the change is initiated by the 

institution, the disclosure requirements of 

this paragraph apply. (Paragraph 1030.5(a) 

applies if the change becomes effective prior 

to the maturity of the existing time account.) 

ii. If the change is initiated by the 

consumer, the account opening disclosure 

requirements of § 1030.4(b) apply. (If the 

notice required by this paragraph has been 

provided, institutions may give new account 

disclosures or disclosures highlighting only 

the new term.) 

6. Example. If a consumer receives a 

prematurity notice on a one-year time 

account and requests a rollover to a sixmonth account, the institution must provide 

either account opening disclosures including 

the new maturity date or, if all other terms 

previously disclosed in the prematurity 

notice remain the same, only the new 

maturity date. 

(b)(1) Maturities of longer than one year. 

1. Highlighting changed terms. Institutions 

need not highlight terms that changed since 

the last account disclosures were provided. 

(c) Notice before maturity for time accounts 

longer than one year that do not renew 

automatically. 

1. Subsequent account. When funds are 

transferred following maturity of a 

nonrollover time account, institutions need 

not provide account disclosures unless a new 

account is established. 

Section 1030.6—Periodic Statement 

Disclosures 

(a) General rule. 

1. General. Institutions are not required to 

provide periodic statements. If they do 

provide statements, disclosures need only be 

furnished to the extent applicable. For 

example, if no interest is earned for a 

statement period, institutions need not state 

that fact. Or, institutions may disclose ‘‘$0’’ 

interest earned and ‘‘0%’’ annual percentage 

yield earned. 

2. Regulation E interim statements. When 

an institution provides regular quarterly 

statements, and in addition provides a 

monthly interim statement to comply with 

Regulation E, the interim statement need not 

comply with this section unless it states 

interest or rate information. (See 12 CFR 

1005.9(b).) 

3. Combined statements. Institutions may 

provide information about an account (such 

as a MMDA) on the periodic statement for 

another account (such as a NOW account) 

without triggering the disclosures required by 

this section, as long as: 

i. The information is limited to the account 

number, the type of account, or balance 

information, and 

ii. The institution also provides a periodic 

statement complying with this section for 

each account. 

4. Other information. Additional 

information that may be given on or with a 

periodic statement includes: 

i. Interest rates and corresponding periodic 

rates applied to balances during the 

statement period. 

ii. The dollar amount of interest earned 

year-to-date. 

iii. Bonuses paid (or any de minimis 

consideration of $10 or less). 

iv. Fees for products such as safe deposit 

boxes. 

(a)(1) Annual percentage yield earned. 

1. Ledger and collected balances. 

Institutions that accrue interest using the 

collected balance method may use either the 

ledger or the collected balance in 

determining the annual percentage yield 

earned. 

(a)(2) Amount of interest. 

1. Accrued interest. Institutions must state 

the amount of interest that accrued during 

the statement period, even if it was not 

credited. 

2. Terminology. In disclosing interest 

earned for the period, institutions must use 

the term ‘‘interest’’ or terminology such as: 

i. ‘‘Interest paid,’’ to describe interest that 

has been credited. 

ii. ‘‘Interest accrued’’ or ‘‘interest earned,’’ 

to indicate that interest is not yet credited. 

3. Closed accounts. If consumers close an 

account between crediting periods and 

forfeits accrued interest, the institution may 

not show any figures for interest earned or 

annual percentage yield earned for the period 

(other than zero, at the institution’s option). 

(a)(3) Fees imposed. 


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Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 79301 

1. General. Periodic statements must state 

fees disclosed under § 1030.4(b) that were 

debited to the account during the statement 

period, even if assessed for an earlier period. 

2. Itemizing fees by type. In itemizing fees 

imposed more than once in the period, 

institutions may group fees if they are the 

same type. (See § 1030.11(a)(1) of this part 

regarding certain fees that are required to be 

grouped.) When fees of the same type are 

grouped together, the description must make 

clear that the dollar figure represents more 

than a single fee, for example, ‘‘total fees for 

checks written this period.’’ Examples of fees 

that may not be grouped together are— 

i. Monthly maintenance and excess-activity 

fees. 

ii. ‘‘Transfer’’ fees, if different dollar 

amounts are imposed, such as $.50 for 

deposits and $1.00 for withdrawals. 

iii. Fees for electronic fund transfers and 

fees for other services, such as balanceinquiry or maintenance fees. 

iv. Fees for paying overdrafts and fees for 

returning checks or other items unpaid. 

3. Identifying fees. Statement details must 

enable consumers to identify the specific fee. 

For example: 

i. Institutions may use a code to identify 

a particular fee if the code is explained on 

the periodic statement or in documents 

accompanying the statement. 

ii. Institutions using debit slips may 

disclose the date the fee was debited on the 

periodic statement and show the amount and 

type of fee on the dated debit slip. 

4. Relation to Regulation E. Disclosure of 

fees in compliance with Regulation E 

complies with this section for fees related to 

electronic fund transfers (for example, 

totaling all electronic funds transfer fees in 

a single figure). 

(a)(4) Length of period. 

1. General. Institutions providing the 

beginning and ending dates of the period 

must make clear whether both dates are 

included in the period. 

2. Opening or closing an account midcycle. If an account is opened or closed 

during the period for which a statement is 

sent, institutions must calculate the annual 

percentage yield earned based on account 

balances for each day the account was open. 

(b) Special rule for average daily balance 

method. 

1. Monthly statements and quarterly 

compounding. This rule applies, for example, 

when an institution calculates interest on a 

quarterly average daily balance and sends 

monthly statements. In this case, the first two 

monthly statements would omit annual 

percentage yield earned and interest earned 

figures; the third monthly statement would 

reflect the interest earned and the annual 

percentage yield earned for the entire quarter. 

2. Length of the period. Institutions must 

disclose the length of both the interest 

calculation period and the statement period. 

For example, a statement could disclose a 

statement period of April 16 through May 15 

and further state that ‘‘the interest earned and 

the annual percentage yield earned are based 

on your average daily balance for the period 

April 1 through April 30.’’ 

3. Quarterly statements and monthly 

compounding. Institutions that use the 

average daily balance method to calculate 

interest on a monthly basis and that send 

statements on a quarterly basis may disclose 

a single interest (and annual percentage yield 

earned) figure. Alternatively, an institution 

may disclose three interest and three annual 

percentage yield earned figures, one for each 

month in the quarter, as long as the 

institution states the number of days (or 

beginning and ending dates) in the interest 

period if different from the statement period. 

Section 1030.7—Payment of Interest 

(a)(1) Permissible methods. 

1. Prohibited calculation methods. 

Calculation methods that do not comply with 

the requirement to pay interest on the full 

amount of principal in the account each day 

include: 

i. Paying interest on the balance in the 

account at the end of the period (the ‘‘ending 

balance’’ method). 

ii. Paying interest for the period based on 

the lowest balance in the account for any day 

in that period (the ‘‘low balance’’ method). 

iii. Paying interest on a percentage of the 

balance, excluding the amount set aside for 

reserve requirements (the ‘‘investable 

balance’’ method). 

2. Use of 365-day basis. Institutions may 

apply a daily periodic rate greater than 1/365 

of the interest rate—such as 1/360 of the 

interest rate—as long as it is applied 365 days 

a year. 

3. Periodic interest payments. An 

institution can pay interest each day on the 

account and still make uniform interest 

payments. For example, for a one-year 

certificate of deposit an institution could 

make monthly interest payments equal to 

1/12 of the amount of interest that will be 

earned for a 365-day period (or 11 uniform 

monthly payments—each equal to roughly 

1/12 of the total amount of interest—and one 

payment that accounts for the remainder of 

the total amount of interest earned for the 

period). 

4. Leap year. Institutions may apply a daily 

rate of 1/366 or 1/365 of the interest rate for 

366 days in a leap year, if the account will 

earn interest for February 29. 

5. Maturity of time accounts. Institutions 

are not required to pay interest after time 

accounts mature. (See 12 CFR Part 217, 

Regulation Q of the Board of Governors of the 

Federal Reserve System, for limitations on 

duration of interest payments.) Examples 

include: 

i. During a grace period offered for an 

automatically renewable time account, if 

consumers decide during that period not to 

renew the account. 

ii. Following the maturity of nonrollover 

time accounts. 

iii. When the maturity date falls on a 

holiday, and consumers must wait until the 

next business day to obtain the funds. 

6. Dormant accounts. Institutions must pay 

interest on funds in an account, even if 

inactivity or the infrequency of transactions 

would permit the institution to consider the 

account to be ‘‘inactive’’ or ‘‘dormant’’ (or 

similar status) as defined by state or other 

law or the account contract. 

(a)(2) Determination of minimum balance 

to earn interest. 

1. Daily balance accounts. Institutions that 

require a minimum balance may choose not 

to pay interest for days when the balance 

drops below the required minimum, if they 

use the daily balance method to calculate 

interest. 

2. Average daily balance accounts. 

Institutions that require a minimum balance 

may choose not to pay interest for the period 

in which the balance drops below the 

required minimum, if they use the average 

daily balance method to calculate interest. 

3. Beneficial method. Institutions may not 

require that consumers maintain both a 

minimum daily balance and a minimum 

average daily balance to earn interest, such 

as by requiring consumers to maintain a $500 

daily balance and a prescribed average daily 

balance (whether higher or lower). But an 

institution could offer a minimum balance to 

earn interest that includes an additional 

method that is ‘‘unequivocally beneficial’’ to 

consumers such as the following: An 

institution using the daily balance method to 

calculate interest and requiring a $500 

minimum daily balance could offer to pay 

interest on the account for those days the 

minimum balance is not met as long as 

consumers maintain an average daily balance 

throughout the month of $400. 

4. Paying on full balance. Institutions must 

pay interest on the full balance in the 

account that meets the required minimum 

balance. For example, if $300 is the 

minimum daily balance required to earn 

interest, and a consumer deposits $500, the 

institution must pay the stated interest rate 

on the full $500 and not just on $200. 

5. Negative balances prohibited. 

Institutions must treat a negative account 

balance as zero to determine: 

i. The daily or average daily balance on 

which interest will be paid. 

ii. Whether any minimum balance to earn 

interest is met. 

6. Club accounts. Institutions offering club 

accounts (such as a ‘‘holiday’’ or ‘‘vacation’’ 

club) cannot impose a minimum balance 

requirement for interest based on the total 

number or dollar amount of payments 

required under the club plan. For example, 

if a plan calls for $10 weekly payments for 

50 weeks, the institution cannot set a $500 

‘‘minimum balance’’ and then pay interest 

only if the consumer has made all 50 

payments. 

7. Minimum balances not affecting interest. 

Institutions may use the daily balance, 

average daily balance, or any other 

computation method to calculate minimum 

balance requirements not involving the 

payment of interest—such as to compute 

minimum balances for assessing fees. 

(b) Compounding and crediting policies. 

1. General. Institutions choosing to 

compound interest may compound or credit 

interest annually, semi-annually, quarterly, 

monthly, daily, continuously, or on any other 

basis. 

2. Withdrawals prior to crediting date. If 

consumers withdraw funds (without closing 

the account) prior to a scheduled crediting 

date, institutions may delay paying the 

accrued interest on the withdrawn amount 

until the scheduled crediting date, but may 

not avoid paying interest. 


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79302 Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 

3. Closed accounts. Subject to state or other 

law, an institution may choose not to pay 

accrued interest if consumers close an 

account prior to the date accrued interest is 

credited, as long as the institution has 

disclosed that fact. 

(c) Date interest begins to accrue. 

1. Relation to Regulation CC. Institutions 

may rely on the Expedited Funds Availability 

Act (EFAA) and Regulation CC of the Board 

of Governors of the Federal Reserve System 

(12 CFR part 229) to determine, for example, 

when a deposit is considered made for 

purposes of interest accrual, or when interest 

need not be paid on funds because a 

deposited check is later returned unpaid. 

2. Ledger and collected balances. 

Institutions may calculate interest by using a 

‘‘ledger’’ or ‘‘collected’’ balance method, as 

long as the crediting requirements of the 

EFAA are met (12 CFR 229.14). 

3. Withdrawal of principal. Institutions 

must accrue interest on funds until the funds 

are withdrawn from the account. For 

example, if a check is debited to an account 

on a Tuesday, the institution must accrue 

interest on those funds through Monday. 

Section 1030.8—Advertising 

(a) Misleading or inaccurate 

advertisements. 

1. General. All advertisements are subject 

to the rule against misleading or inaccurate 

advertisements, even though the disclosures 

applicable to various media differ. 

2. Indoor signs. An indoor sign advertising 

an annual percentage yield is not misleading 

or inaccurate when: 

i. For a tiered-rate account, it also provides 

the lower dollar amount of the tier 

corresponding to the advertised annual 

percentage yield. 

ii. For a time account, it also provides the 

term required to obtain the advertised annual 

percentage yield. 

3. Fees affecting ‘‘free’’ accounts. For 

purposes of determining whether an account 

can be advertised as ‘‘free’’ or ‘‘no cost,’’ 

maintenance and activity fees include: 

i. Any fee imposed when a minimum 

balance requirement is not met, or when 

consumers exceed a specified number of 

transactions. 

ii. Transaction and service fees that 

consumers reasonably expect to be imposed 

on a regular basis. 

iii. A flat fee, such as a monthly service fee. 

iv. Fees imposed to deposit, withdraw, or 

transfer funds, including per-check or pertransaction charges (for example, $.25 for 

each withdrawal, whether by check or in 

person). 

4. Other fees. Examples of fees that are not 

maintenance or activity fees include: 

i. Fees not required to be disclosed under 

§ 1030.4(b)(4). 

ii. Check printing fees. 

iii. Balance inquiry fees. 

iv. Stop-payment fees and fees associated 

with checks returned unpaid. 

v. Fees assessed against a dormant account. 

vi. Fees for ATM or electronic transfer 

services (such as preauthorized transfers or 

home banking services) not required to 

obtain an account. 

5. Similar terms. An advertisement may 

not use the term ‘‘fees waived’’ if a 

maintenance or activity fee may be imposed 

because it is similar to the terms ‘‘free’’ or 

‘‘no cost.’’ 

6. Specific account services. Institutions 

may advertise a specific account service or 

feature as free if no fee is imposed for that 

service or feature. For example, institutions 

offering an account that is free of deposit or 

withdrawal fees could advertise that fact, as 

long as the advertisement does not mislead 

consumers by implying that the account is 

free and that no other fee (a monthly service 

fee, for example) may be charged. 

7. Free for limited time. If an account (or 

a specific account service) is free only for a 

limited period of time—for example, for one 

year following the account opening—the 

account (or service) may be advertised as free 

if the time period is also stated. 

8. Conditions not related to deposit 

accounts. Institutions may advertise accounts 

as ‘‘free’’ for consumers meeting conditions 

not related to deposit accounts, such as the 

consumer’s age. For example, institutions 

may advertise a NOW account as ‘‘free for 

persons over 65 years old,’’ even though a 

maintenance or activity fee is assessed on 

accounts held by consumers 65 or younger. 

9. Electronic advertising. If an electronic 

advertisement (such as an advertisement 

appearing on an Internet Web site) displays 

a triggering term (such as a bonus or annual 

percentage yield) the advertisement must 

clearly refer the consumer to the location 

where the additional required information 

begins. For example, an advertisement that 

includes a bonus or annual percentage yield 

may be accompanied by a link that directly 

takes the consumer to the additional 

information. 

10. Examples. Examples of advertisements 

that would ordinarily be misleading, 

inaccurate, or misrepresent the deposit 

contract are: 

i. Representing an overdraft service as a 

‘‘line of credit,’’ unless the service is subject 

to Regulation Z, 12 CFR part 1026. 

ii. Representing that the institution will 

honor all checks or authorize payment of all 

transactions that overdraw an account, with 

or without a specified dollar limit, when the 

institution retains discretion at any time not 

to honor checks or authorize transactions. 

iii. Representing that consumers with an 

overdrawn account are allowed to maintain 

a negative balance when the terms of the 

account’s overdraft service require 

consumers promptly to return the deposit 

account to a positive balance. 

iv. Describing an institution’s overdraft 

service solely as protection against bounced 

checks when the institution also permits 

overdrafts for a fee for overdrawing their 

accounts by other means, such as ATM 

withdrawals, debit card transactions, or other 

electronic fund transfers. 

v. Advertising an account-related service 

for which the institution charges a fee in an 

advertisement that also uses the word ‘‘free’’ 

or ‘‘no cost’’ (or a similar term) to describe 

the account, unless the advertisement clearly 

and conspicuously indicates that there is a 

cost associated with the service. If the fee is 

a maintenance or activity fee under 

§ 1030.8(a)(2) of this part, however, an 

advertisement may not describe the account 

as ‘‘free’’ or ‘‘no cost’’ (or contain a similar 

term) even if the fee is disclosed in the 

advertisement. 

11. Additional disclosures in connection 

with the payment of overdrafts. The rule in 

§ 1030.3(a), providing that disclosures 

required by § 1030.8 may be provided to the 

consumer in electronic form without regard 

to E-Sign Act requirements, applies to the 

disclosures described in § 1030.11(b), which 

are incorporated by reference in § 1030.8(f). 

(b) Permissible rates. 

1. Tiered-rate accounts. An advertisement 

for a tiered-rate account that states an annual 

percentage yield must also state the annual 

percentage yield for each tier, along with 

corresponding minimum balance 

requirements. Any interest rates stated must 

appear in conjunction with the applicable 

annual percentage yields for each tier. 

2. Stepped-rate accounts. An 

advertisement that states an interest rate for 

a stepped-rate account must state all the 

interest rates and the time period that each 

rate is in effect. 

3. Representative examples. An 

advertisement that states an annual 

percentage yield for a given type of account 

(such as a time account for a specified term) 

need not state the annual percentage yield 

applicable to other time accounts offered by 

the institution or indicate that other maturity 

terms are available. In an advertisement 

stating that rates for an account may vary 

depending on the amount of the initial 

deposit or the term of a time account, 

institutions need not list each balance level 

and term offered. Instead, the advertisement 

may: 

i. Provide a representative example of the 

annual percentage yields offered, clearly 

described as such. For example, if an 

institution offers a $25 bonus on all time 

accounts and the annual percentage yield 

will vary depending on the term selected, the 

institution may provide a disclosure of the 

annual percentage yield as follows: ‘‘For 

example, our 6-month certificate of deposit 

currently pays a 3.15% annual percentage 

yield.’’ 

ii. Indicate that various rates are available, 

such as by stating short-term and longer-term 

maturities along with the applicable annual 

percentage yields: ‘‘We offer certificates of 

deposit with annual percentage yields that 

depend on the maturity you choose. For 

example, our one-month CD earns a 2.75% 

APY. Or, earn a 5.25% APY for a three-year 

CD.’’ 

(c) When additional disclosures are 

required. 

1. Trigger terms. The following are 

examples of information stated in 

advertisements that are not ‘‘trigger’’ terms: 

i. ‘‘One, three, and five year CDs 

available.’’ 

ii. ‘‘Bonus rates available.’’ 

iii. ‘‘1% over our current rates,’’ so long as 

the rates are not determinable from the 

advertisement. 

(c)(2) Time annual percentage yield is 

offered. 

1. Specified date. If an advertisement 

discloses an annual percentage yield as of a 

specified date, that date must be recent in 

relation to the publication or broadcast 


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Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 79303 

frequency of the media used, taking into 

account the particular circumstances or 

production deadlines involved. For example, 

the printing date of a brochure printed once 

for a deposit account promotion that will be 

in effect for six months would be considered 

‘‘recent,’’ even though rates change during 

the six-month period. Rates published in a 

daily newspaper or on television must reflect 

rates offered shortly before (or on) the date 

the rates are published or broadcast. 

2. Reference to date of publication. An 

advertisement may refer to the annual 

percentage yield as being accurate as of the 

date of publication, if the date is on the 

publication itself. For instance, an 

advertisement in a periodical may state that 

a rate is ‘‘current through the date of this 

issue,’’ if the periodical shows the date. 

(c)(5) Effect of fees. 

1. Scope. This requirement applies only to 

maintenance or activity fees described in 

comment 8(a). 

(c)(6) Features of time accounts. 

(c)(6)(i) Time requirements. 

1. Club accounts. If a club account has a 

maturity date but the term may vary 

depending on when the account is opened, 

institutions may use a phrase such as: ‘‘The 

maturity date of this club account is 

November 15; its term varies depending on 

when the account is opened.’’ 

(c)(6)(ii) Early withdrawal penalties. 

1. Discretionary penalties. Institutions 

imposing early withdrawal penalties on a 

case-by-case basis may disclose that they 

‘‘may’’ (rather than ‘‘will’’) impose a penalty 

if such a disclosure accurately describes the 

account terms. 

(d) Bonuses. 

1. General reference to ‘‘bonus.’’ General 

statements such as ‘‘bonus checking’’ or ‘‘get 

a bonus when you open a checking account’’ 

do not trigger the bonus disclosures. 

(e) Exemption for certain advertisements. 

(e)(1) Certain media. 

Paragraph (e)(1)(i). 

1. Internet advertisements. The exemption 

for advertisements made through broadcast 

or electronic media does not extend to 

advertisements posted on the Internet or sent 

by email. 

Paragraph (e)(1)(iii). 

1. Tiered-rate accounts. Solicitations for a 

tiered-rate account made through telephone 

response machines must provide the annual 

percentage yields and the balance 

requirements applicable to each tier. 

(e)(2) Indoor signs. 

Paragraph (e)(2)(i). 

1. General. Indoor signs include 

advertisements displayed on computer 

screens, banners, preprinted posters, and 

chalk or peg boards. Any advertisement 

inside the premises that can be retained by 

a consumer (such as a brochure or a printout 

from a computer) is not an indoor sign. 

Section 1030.9—Enforcement and Record 

Retention 

(c) Record retention. 

1. Evidence of required actions. Institutions 

comply with the regulation by demonstrating 

that they have done the following: 

i. Established and maintained procedures 

for paying interest and providing timely 

disclosures as required by the regulation, and 

ii. Retained sample disclosures for each 

type of account offered to consumers, such as 

account-opening disclosures, copies of 

advertisements, and change-in-term notices; 

and information regarding the interest rates 

and annual percentage yields offered. 

2. Methods of retaining evidence. 

Institutions must be able to reconstruct the 

required disclosures or other actions. They 

need not keep disclosures or other business 

records in hard copy. Records evidencing 

compliance may be retained on microfilm, 

microfiche, or by other methods that 

reproduce records accurately (including 

computer files). 

3. Payment of interest. Institutions must 

retain sufficient rate and balance information 

to permit the verification of interest paid on 

an account, including the payment of interest 

on the full principal balance. 

Section 1030.10—[Reserved] 

Section 1030.11—Additional Disclosures 

Regarding the Payment of Overdrafts 

(a) Disclosure of total fees on periodic 

statements. 

(a)(1) General. 

1. Transfer services. The overdraft services 

covered by § 1030.11(a)(1) of this part do not 

include a service providing for the transfer of 

funds from another deposit account of the 

consumer to permit the payment of items 

without creating an overdraft, even if a fee is 

charged for the transfer. 

2. Fees for paying overdrafts. Institutions 

must disclose on periodic statements a total 

dollar amount for all fees or charges imposed 

on the account for paying overdrafts. The 

institution must disclose separate totals for 

the statement period and for the calendar 

year-to-date. The total dollar amount for each 

of these periods includes per-item fees as 

well as interest charges, daily or other 

periodic fees, or fees charged for maintaining 

an account in overdraft status, whether the 

overdraft is by check, debit card transaction, 

or by any other transaction type. It also 

includes fees charged when there are 

insufficient funds because previously 

deposited funds are subject to a hold or are 

uncollected. It does not include fees for 

transferring funds from another account of 

the consumer to avoid an overdraft, or fees 

charged under a service subject to Regulation 

Z (12 CFR part 1026). See also comment 

11(c)–2. Under § 1030.11(a)(1)(i), the 

disclosure must describe the total dollar 

amount for all fees or charges imposed on the 

account for the statement period and 

calendar year-to-date for paying overdrafts 

using the term ‘‘Total Overdraft Fees.’’ This 

requirement applies notwithstanding 

comment 3(a)–2. 

3. Fees for returning items unpaid. The 

total dollar amount for all fees for returning 

items unpaid must include all fees charged 

to the account for dishonoring or returning 

checks or other items drawn on the account. 

The institution must disclose separate totals 

for the statement period and for the calendar 

year-to-date. Fees imposed when deposited 

items are returned are not included. 

Institutions may use terminology such as 

‘‘returned item fee’’ or ‘‘NSF fee’’ to describe 

fees for returning items unpaid. 

4. Waived fees. In some cases, an 

institution may provide a statement for the 

current period reflecting that fees imposed 

during a previous period were waived and 

credited to the account. Institutions may, but 

are not required to, reflect the adjustment in 

the total for the calendar year-to-date and in 

the applicable statement period. For 

example, if an institution assesses a fee in 

January and refunds the fee in February, the 

institution could disclose a year-to-date total 

reflecting the amount credited, but it should 

not affect the total disclosed for the February 

statement period, because the fee was not 

assessed in the February statement period. If 

an institution assesses and then waives and 

credits a fee within the same cycle, the 

institution may, at its option, reflect the 

adjustment in the total disclosed for fees 

imposed during the current statement period 

and for the total for the calendar year-to-date. 

Thus, if the institution assesses and waives 

the fee in the February statement period, the 

February fee total could reflect a total net of 

the waived fee. 

5. Totals for the calendar year to date. 

Some institutions’ statement periods do not 

coincide with the calendar month. In such 

cases, the institution may disclose a calendar 

year-to-date total by aggregating fees for 12 

monthly cycles, starting with the period that 

begins during January and finishing with the 

period that begins during December. For 

example, if statement periods begin on the 

10th day of each month, the statement 

covering December 10, 2006 through January 

9, 2007 may disclose the year-to-date total for 

fees imposed from January 10, 2006 through 

January 9, 2007. Alternatively, the institution 

could provide a statement for the cycle 

ending January 9, 2007 showing the year-todate total for fees imposed January 1, 2006 

through December 31, 2006. 

6. Itemization of fees. An institution may 

itemize each fee in addition to providing the 

disclosures required by § 1030.11(a)(1) of this 

part. 

(a)(3) Format requirements. 

1. Time period covered by periodic 

statement disclosures. The disclosures under 

§ 1030.11(a) must be included on periodic 

statements provided by an institution starting 

the first statement period that begins after 

January 1, 2010. For example, if a consumer’s 

statement period typically closes on the 15th 

of each month, an institution must provide 

the disclosures required by § 1030.11(a)(1) on 

subsequent periodic statements for that 

consumer beginning with the statement 

reflecting the period from January 16, 2010 

to February 15, 2010. 

(b) Advertising disclosures for overdraft 

services. 

1. Examples of institutions promoting the 

payment of overdrafts. A depository 

institution would be required to include the 

advertising disclosures in § 1030.11(b)(1) of 

this part if the institution: 

i. Promotes the institution’s policy or 

practice of paying overdrafts (unless the 

service would be subject to Regulation Z (12 

CFR part 1026)). This includes 

advertisements using print media such as 

newspapers or brochures, telephone 

solicitations, electronic mail, or messages 

posted on an Internet site. (But see 


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79304 Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 

§ 1030.11(b)(2) of this part for 

communications that are not subject to the 

additional advertising disclosures.) 

ii. Includes a message on a periodic 

statement informing the consumer of an 

overdraft limit or the amount of funds 

available for overdrafts. For example, an 

institution that includes a message on a 

periodic statement informing the consumer 

of a $500 overdraft limit or that the consumer 

has $300 remaining on the overdraft limit, is 

promoting an overdraft service. 

iii. Discloses an overdraft limit or includes 

the dollar amount of an overdraft limit in a 

balance disclosed on an automated system, 

such as a telephone response machine, ATM 

screen or the institution’s Internet site. (See, 

however, § 1030.11(b)(3) of this part.) 

2. Transfer services. The overdraft services 

covered by § 1030.11(b)(1) of this part do not 

include a service providing for the transfer of 

funds from another deposit account of the 

consumer to permit the payment of items 

without creating an overdraft, even if a fee is 

charged for the transfer. 

3. Electronic media. The exception for 

advertisements made through broadcast or 

electronic media, such as television or radio, 

does not apply to advertisements posted on 

an institution’s Internet site, on an ATM 

screen, provided on telephone response 

machines, or sent by electronic mail. 

4. Fees. The fees that must be disclosed 

under § 1030.11(b)(1) of this part include peritem fees as well as interest charges, daily or 

other periodic fees, and fees charged for 

maintaining an account in overdraft status, 

whether the overdraft is by check or by other 

means. The fees also include fees charged 

when there are insufficient funds because 

previously deposited funds are subject to a 

hold or are uncollected. The fees do not 

include fees for transferring funds from 

another account to avoid an overdraft, or fees 

charged when the institution has previously 

agreed in writing to pay items that overdraw 

the account and the service is subject to 

Regulation Z, 12 CFR Part 1026. 

5. Categories of transactions. An 

exhaustive list of transactions is not required. 

Disclosing that a fee may be imposed for 

covering overdrafts ‘‘created by check, inperson withdrawal, ATM withdrawal, or 

other electronic means’’ would satisfy the 

requirements of § 1030.11(b)(1)(ii) of this part 

where the fee may be imposed in these 

circumstances. See comment 4(b)(4)–5 of this 

part. 

6. Time period to repay. If a depository 

institution reserves the right to require a 

consumer to pay an overdraft immediately or 

on demand instead of affording consumers a 

specific time period to establish a positive 

balance in the account, an institution may 

comply with § 1030.11(b)(1)(iii) of this part 

by disclosing this fact. 

7. Circumstances for nonpayment. An 

institution must describe the circumstances 

under which it will not pay an overdraft. It 

is sufficient to state, as applicable: ‘‘Whether 

your overdrafts will be paid is discretionary 

and we reserve the right not to pay. For 

example, we typically do not pay overdrafts 

if your account is not in good standing, or 

you are not making regular deposits, or you 

have too many overdrafts.’’ 

8. Advertising an account as ‘‘free.’’ If the 

advertised account-related service is an 

overdraft service subject to the requirements 

of § 1030.11(b)(1) of this part, institutions 

must disclose the fee or fees for the payment 

of each overdraft, not merely that a cost is 

associated with the overdraft service, as well 

as other required information. Compliance 

with comment 8(a)–10.v. is not sufficient. 

(c) Disclosure of account balances. 

1. Balance that does not include additional 

amounts. For purposes of the balance 

disclosure requirement in § 1030.11(c), if an 

institution discloses balance information to a 

consumer through an automated system, it 

must disclose a balance that excludes any 

funds that the institution may provide to 

cover an overdraft pursuant to a discretionary 

overdraft service, that will be paid by the 

institution under a service subject to 

Regulation Z (12 CFR Part 1026), or that will 

be transferred from another account held 

individually or jointly by a consumer. The 

balance may, but need not, include funds 

that are deposited in the consumer’s account, 

such as from a check, that are not yet made 

available for withdrawal in accordance with 

the funds availability rules under Regulation 

CC of the Board of Governors of the Federal 

Reserve System (12 CFR part 229). In 

addition, the balance may, but need not, 

include funds that are held by the institution 

to satisfy a prior obligation of the consumer 

(for example, to cover a hold for an ATM or 

debit card transaction that has been 

authorized but for which the bank has not 

settled). 

2. Retail sweep programs. In a retail sweep 

program, an institution establishes two 

legally distinct subaccounts, a transaction 

subaccount and a savings subaccount, which 

together make up the consumer’s account. 

The institution allocates and transfers funds 

between the two subaccounts in order to 

maximize the balance in the savings account 

while complying with the monthly 

limitations on transfers out of savings 

accounts under Regulation D of the Board of 

Governors of the Federal Reserve System (12 

CFR 204.2(d)(2)). Retail sweep programs are 

generally not established for the purpose of 

covering overdrafts. Rather, institutions 

typically establish retail sweep programs by 

agreement with the consumer, in order for 

the institution to minimize its transaction 

account reserve requirements and, in some 

cases, to provide a higher interest rate than 

the consumer would earn on a transaction 

account alone. Section 1030.11(c) does not 

require an institution to exclude from the 

consumer’s balance funds that may be 

transferred from another account pursuant to 

a retail sweep program that is established for 

such purposes and that has the following 

characteristics: 

i. The account involved complies with 

Regulation D of the Board of Governors of the 

Federal Reserve System (12 CFR 204.2(d)(2)); 

ii. The consumer does not have direct 

access to the non-transaction subaccount that 

is part of the retail sweep program; and 

iii. The consumer’s periodic statements 

show the account balance as the combined 

balance in the subaccounts. 

3. Additional balance. The institution may 

disclose additional balances supplemented 

by funds that may be provided by the 

institution to cover an overdraft, whether 

pursuant to a discretionary overdraft service, 

a service subject to Regulation Z (12 CFR Part 

1026), or a service that transfers funds from 

another account held individually or jointly 

by the consumer, so long as the institution 

prominently states that any additional 

balance includes these additional overdraft 

amounts. The institution may not simply 

state, for instance, that the second balance is 

the consumer’s ‘‘available balance,’’ or 

contains ‘‘available funds.’’ Rather, the 

institution should provide enough 

information to convey that the second 

balance includes these amounts. For 

example, the institution may state that the 

balance includes ‘‘overdraft funds.’’ Where a 

consumer has not opted into, or as 

applicable, has opted out of the institution’s 

discretionary overdraft service, any 

additional balance disclosed should not 

include funds that otherwise might be 

available under that service. Where a 

consumer has not opted into, or as 

applicable, has opted out of, the institution’s 

discretionary overdraft service for some, but 

not all transactions (e.g. , the consumer has 

not opted into overdraft services for ATM 

and one-time debit card transactions), an 

institution that includes these additional 

overdraft funds in the second balance should 

convey that the overdraft funds are not 

available for all transactions. For example, 

the institution could state that overdraft 

funds are not available for ATM and one-time 

(or everyday) debit card transactions. 

Similarly, if funds are not available for all 

transactions pursuant to a service subject to 

Regulation Z (12 CFR part 1026) or a service 

that transfers funds from another account, a 

second balance that includes such funds 

should also indicate this fact. 

4. Automated systems. The balance 

disclosure requirement in § 1030.11(c) 

applies to any automated system through 

which the consumer requests a balance, 

including, but not limited to, a telephone 

response system, the institution’s Internet 

site, or an ATM. The requirement applies 

whether the institution discloses a balance 

through an ATM owned or operated by the 

institution or through an ATM not owned or 

operated by the institution (including an 

ATM operated by a non-depository 

institution). If the balance is obtained at an 

ATM, the requirement also applies whether 

the balance is disclosed on the ATM screen 

or on a paper receipt. 

Appendix A to Part 1030—Annual 

Percentage Yield Calculation 

Part I. Annual Percentage Yield for Account 

Disclosures and Advertising Purposes 

1. Rounding for calculations. The 

following are examples of permissible 

rounding for calculating interest and the 

annual percentage yield: 

i. The daily rate applied to a balance 

carried to five or more decimal places 

ii. The daily interest earned carried to five 

or more decimal places 


TKELLEY on DSK3SPTVN1PROD with RULES_2
Federal Register / Vol. 76, No. 245 / Wednesday, December 21, 2011 / Rules and Regulations 79305 

Part II. Annual Percentage Yield Earned for 

Periodic Statements 

1. Balance method. The interest figure used 

in the calculation of the annual percentage 

yield earned may be derived from the daily 

balance method or the average daily balance 

method. The balance used in the formula for 

the annual percentage yield earned is the 

sum of the balances for each day in the 

period divided by the number of days in the 

period. 

2. Negative balances prohibited. 

Institutions must treat a negative account 

balance as zero to determine the balance on 

which the annual percentage yield earned is 

calculated. (See commentary to 

§ 1030.7(a)(2).) 

A. General Formula 

1. Accrued but uncredited interest. To 

calculate the annual percentage yield earned, 

accrued but uncredited interest: 

i. May not be included in the balance for 

statements issued at the same time or less 

frequently than the account’s compounding 

and crediting frequency. For example, if 

monthly statements are sent for an account 

that compounds interest daily and credits 

interest monthly, the balance may not be 

increased each day to reflect the effect of 

daily compounding. 

ii. Must be included in the balance for 

succeeding statements if a statement is issued 

more frequently than compounded interest is 

credited on an account. For example, if 

monthly statements are sent for an account 

that compounds interest daily and credits 

interest quarterly, the balance for the second 

monthly statement would include interest 

that had accrued for the prior month. 

2. Rounding. The interest earned figure 

used to calculate the annual percentage yield 

earned must be rounded to two decimals and 

reflect the amount actually paid. For 

example, if the interest earned for a statement 

period is $20.074 and the institution pays the 

consumer $20.07, the institution must use 

$20.07 (not $20.074) to calculate the annual 

percentage yield earned. For accounts paying 

interest based on the daily balance method 

that compound and credit interest quarterly, 

and send monthly statements, the institution 

may, but need not, round accrued interest to 

two decimals for calculating the annual 

percentage yield earned on the first two 

monthly statements issued during the 

quarter. However, on the quarterly statement 

the interest earned figure must reflect the 

amount actually paid. 

B. Special Formula for Use Where Periodic 

Statement Is Sent More Often Than the 

Period for Which Interest Is Compounded 

1. Statements triggered by Regulation E. 

Institutions may, but need not, use this 

formula to calculate the annual percentage 

yield earned for accounts that receive 

quarterly statements and are subject to 

Regulation E’s rule calling for monthly 

statements when an electronic fund transfer 

has occurred. They may do so even though 

no monthly statement was issued during a 

specific quarter. But institutions must use 

this formula for accounts that compound and 

credit interest quarterly and receive monthly 

statements that, while triggered by 

Regulation E, comply with the provisions of 

§ 1030.6. 

2. Days in compounding period. 

Institutions using the special annual 

percentage yield earned formula must use the 

actual number of days in the compounding 

period. 

Appendix B to Part 1030—Model 

Clauses and Sample Forms 

1. Modifications. Institutions that modify 

the model clauses will be deemed in 

compliance as long as they do not delete 

required information or rearrange the format 

in a way that affects the substance or clarity 

of the disclosures. 

2. Format. Institutions may use inserts to 

a document (see Sample Form B–4) or fill-in 

blanks (see Sample Forms B–5, B–6 and B– 

7, which use underlining to indicate terms 

that have been filled in) to show current 

rates, fees, or other terms. 

3. Disclosures for opening accounts. The 

sample forms illustrate the information that 

must be provided to consumers when an 

account is opened, as required by 

§ 1030.4(a)(1). (See § 1030.4(a)(2), which 

states the requirements for disclosing the 

annual percentage yield, the interest rate, and 

the maturity of a time account in responding 

to a consumer’s request.) 

4. Compliance with Regulation E. 

Institutions may satisfy certain requirements 

under Regulation DD with disclosures that 

meet the requirements of Regulation E. (See 

§ 1030.3(c).) For disclosures covered by both 

this part and Regulation E (such as the 

amount of fees for ATM usage, institutions 

should consult Appendix A to Regulation E 

for appropriate model clauses. 

5. Duplicate disclosures. If a requirement 

such as a minimum balance applies to more 

than one account term (to obtain a bonus and 

determine the annual percentage yield, for 

example), institutions need not repeat the 

requirement for each term, as long as it is 

clear which terms the requirement applies to. 

6. Sample forms. The sample forms (B–4 

through B–8) serve a purpose different from 

the model clauses. They illustrate ways of 

adapting the model clauses to specific 

accounts. The clauses shown relate only to 

the specific transactions described. 

B–1 Model Clauses for Account Disclosures 

B–1(h) Disclosures Relating to Time Accounts 

1. Maturity. The disclosure in Clause (h)(i) 

stating a specific date may be used in all 

cases. The statement describing a time period 

is appropriate only when providing 

disclosures in response to a consumer’s 

request. 

B–2 Model Clauses for Change in Terms 

1. General. The second clause, describing 

a future decrease in the interest rate and 

annual percentage yield, applies to fixed-rate 

accounts only. 

B–4 Sample Form (Multiple Accounts) 

1. Rate sheet insert. In the rate sheet insert, 

the calculations of the annual percentage 

yield for the three-month and six-month 

certificates are based on 92 days and 181 

days respectively. All calculations in the 

insert assume daily compounding. 

B–6 Sample Form (Tiered-Rate Money 

Market Account) 

1. General. Sample Form B–6 uses Tiering 

Method A (discussed in Appendix A and 

Clause (a)(iv)) to calculate interest. It gives a 

narrative description of a tiered-rate account; 

institutions may use different formats (for 

example, a chart similar to the one in Sample 

Form B–4), as long as all required 

information for each tier is clearly presented. 

The form does not contain a separate 

disclosure of the minimum balance required 

to obtain the annual percentage yield; the 

tiered-rate disclosure provides that 

information. 

Dated: October 24, 2011. 

Alastair M. Fitzpayne, 

Deputy Chief of Staff and Executive Secretary, 

Department of the Treasury. 

[FR Doc. 2011–31727 Filed 12–20–11; 8:45 am] 

BILLING CODE 4810–AM–P 


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