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Text: Congress has expressly delegated to the Board the authority to prescribe regulations containing "such classifications, differentiations, or other provisions" as, in the judgment of the Board, "are necessary or proper to effectuate the purposes of [TILA], to prevent circumvention or evasion thereof, or to facilitate compliance therewith." § 1604(a). Thus, the Court has previously recognized that "the [Board] has played a pivotal role in `setting [TILA] in motion. . . .'" Ford Motor Credit Co. v. Milhollin, 444 U. S. 555, 566 (1980) (quoting Norwegian Nitrogen Products Co. v. United States, 288 U. S. 294, 315 (1933)). Indeed, "Congress has specifically designated the [Board] and staff as the primary source for interpretation and application of truth-in-lending law." 444 U. S., at 566. As the Court recognized in Ford Motor Credit Co., twice since the passage of TILA, Congress has made this intention clear: first by providing a good-faith defense to creditors who comply with the Board's rules and regulations, 88 Stat. 1518, codified at 15 U. S. C. § 1640(f), and, second, by expanding this good-faith defense to creditors who conform to "any interpretation or approval by an official or employee of the Federal Reserve System duly authorized by the Board to issue such interpretations or approvals," 90 Stat. 197, codified as amended, at § 1640(f). 444 U. S., at 566-567.

Respondent does not challenge the Board's authority to issue binding regulations. Thus, in determining whether *239 Regulation Z's interpretation of TILA's text is binding on the courts, we are faced with only two questions. We first ask whether "Congress has directly spoken to the precise question at issue." Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842 (1984). If so, courts, as well as the agency, "must give effect to the unambiguously expressed intent of Congress." Id., at 842-843. However, whenever Congress has "explicitly left a gap for the agency to fill," the agency's regulation is "given controlling weight unless [it is] arbitrary, capricious, or manifestly contrary to the statute." Id., at 843-844.

TILA itself does not explicitly address whether over-limit fees are included within the definition of "finance charge." Congress defined "finance charge" as "all charges, payable directly or indirectly by the person to whom the credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit." § 1605(a). The Court of Appeals, however, made no attempt to clarify the scope of the critical term "incident to the extension of credit." The Court of Appeals recognized that, "`[i]n ascertaining the plain meaning of the statute, the court must look to the particular statutory language at issue, as well as the language and design of the statute as a whole.'" 295 F. 3d, at 529-530 (quoting K mart Corp. v. Cartier, Inc., 486 U. S. 281, 291 (1988)). However, the Court of Appeals failed to examine TILA's other provisions, or even the surrounding language in § 1605, before reaching its conclusion. Because petitioners would not have imposed the over-limit fee had they not "granted [respondent's] request for additional credit, which resulted in her exceeding her credit limit," the Court of Appeals held that the over-limit fee in this case fell squarely within § 1605(a)'s definition of "finance charge." 295 F. 3d, at 528-529. Thus, the Court of Appeals rested *240 its holding primarily on its particular characterization of the transaction that led to the over-limit charge in this case.[3]

The Court of Appeals' characterization of the transaction in this case, however, is not supported even by the facts as set forth in respondent's complaint. Respondent alleged in her complaint that the over-limit fee is imposed for each month in which her balance exceeds the original credit limit. App. to Pet. for Cert. A39, ¶ 35. If this were true, however, the over-limit fee would be imposed not as a direct result of an extension of credit for a purchase that caused respondent to exceed her $2,000 limit, but rather as a result of the fact that her charges exceeded her $2,000 limit at the time respondent's monthly charges were officially calculated. Because over-limit fees, regardless of a creditor's particular billing practices, are imposed only when a consumer exceeds his credit limit, it is perfectly reasonable to characterize an over-limit fee not as a charge imposed for obtaining an extension of credit over a consumer's credit limit, but rather as a penalty for violating the credit agreement.

The Court of Appeals thus erred in resting its conclusion solely on this particular characterization of the details of credit card transactions, a characterization that is not clearly compelled by the terms and definitions of TILA, and one with which others could reasonably disagree. Certainly, regardless of how the fee is characterized, there is at least some connection between the over-limit fee and an extension of credit. But, this Court has recognized that the phrase *241 "incident to or in conjunction with" implies some necessary connection between the antecedent and its object, although it "does not place beyond rational debate the nature or extent of the required connection." Holly Farms Corp. v. NLRB, 517 U. S. 392, 403, n. 9 (1996) (internal quotation marks omitted). In other words, the phrase "incident to" does not make clear whether a substantial (as opposed to a remote) connection is required. Thus, unlike the Court of Appeals, we cannot conclude that the term "finance charge" unambiguously includes over-limit fees. That term, standing alone, is ambiguous.

Moreover, an examination of TILA's related provisions, as well as the full text of § 1605 itself, casts doubt on the Court of Appeals' interpretation of the statute. A consumer holding an open-end credit plan may incur two types of charges _x0097_ finance charges and "other charges which may be imposed as part of the plan." §§ 1637(a)(1)-(5). TILA does not make clear which charges fall into each category. But TILA's recognition of at least two categories of charges does make clear that Congress did not contemplate that all charges made in connection with an open-end credit plan would be considered "finance charges." And where TILA does explicitly address over-limit fees, it defines them as fees imposed "in connection with an extension of credit," § 1637(c)(1)(B)(iii), rather than "incident to the extension of credit," § 1605(a). Furthermore, none of § 1605's specific examples of charges that fall within the definition of "finance charge" includes over-limit or comparable fees. See, e. g., § 1605(a)(2) ("[s]ervice or carrying charge"); § 1605(a)(3) (loan fee or similar charge); § 1605(a)(6) (mortgage broker fees).[4]

*242 As our prior discussion indicates, the best interpretation of the term "finance charge" may exclude over-limit fees. But § 1605(a) is, at best, ambiguous, because neither § 1605(a) nor its surrounding provisions provides a clear answer. While we acknowledge that there may be some fees not explicitly addressed by § 1605(a)'s definition of "finance charge" but which are unambiguously included in or excluded by that definition, over-limit fees are not such fees.

Because § 1605 is ambiguous, the Board's regulation implementing § 1605 "is binding in the courts unless procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute." United States v. Mead Corp., 533 U. S. 218, 227 (2001).

Regulation Z's exclusion of over-limit fees from the term "finance charge" is in no way manifestly contrary to § 1605. Regulation Z defines the term "finance charge" as "the cost of consumer credit." 12 CFR § 226.4 (2004). It specifically excludes from the definition of "finance charge" the following:

"(1) Application fees charged to all applicants for credit, whether or not credit is actually extended.
"(2) Charges for actual unanticipated late payment, for exceeding a credit limit, or for delinquency, default, or a similar occurrence.
"(3) Charges imposed by a financial institution for paying items that overdraw an account, unless the payment of such items and the imposition of the charge were previously agreed upon in writing.
"(4) Fees charged for participation in a credit plan, whether assessed on an annual or other periodic basis.
*243 "(5) Seller's points.
"(6) Interest forfeited as a result of an interest reduction required by law on a time deposit used as security for an extension of credit.
"(7) [Certain fees related to real estate.]
"(8) Discounts offered to induce payment for a purchase by cash, check, or other means, as provided in section 167(b) of the Act." § 226.4(c) (emphasis added).
The Board adopted the regulation to emphasize "disclosures that are relevant to credit decisions, as opposed to disclosures related to events occurring after the initial credit choice," because "the primary goals of [TILA] are not particularly enhanced by regulatory provisions relating to changes in terms on outstanding obligations and on the effects of the failure to comply with the terms of the obligation." 45 Fed. Reg. 80649 (1980). The Board's decision to emphasize disclosures that are most relevant to a consumer's initial credit decisions reflects an understanding that "[m]eaningful disclosure does not mean more disclosure," but instead "describes a balance between `competing considerations of complete disclosure . . . and the need to avoid . . . [informational overload].'" Ford Motor Credit Co., 444 U. S., at 568 (quoting S. Rep. No. 96-73, p. 3 (1979)). Although the fees excluded from the term "finance charge" in Regulation Z (e. g., application charges, late payment charges, and over-limit fees) might be relevant to a consumer's credit decision, the Board rationally concluded that these fees _x0097_ which are not automatically recurring or are imposed only when a consumer defaults on a credit agreement _x0097_ are less relevant to determining the true cost of credit. Because over-limit fees, which are imposed only when a consumer breaches the terms of his credit agreement, can reasonably be characterized as a penalty for defaulting on the credit agreement, the Board's decision to exclude them from the term "finance charge" is surely reasonable.

*244 In holding that Regulation Z conflicts with § 1605's definition of the term "finance charge," the Court of Appeals ignored our warning that "judges ought to refrain from substituting their own interstitial lawmaking for that of the [Board]." Ford Motor Credit Co., supra, at 568. Despite the Board's rational decision to adopt a uniform rule excluding from the term "finance charge" all penalties imposed for exceeding the credit limit, the Court of Appeals adopted a case-by-case approach contingent on whether an act of default was "unilateral." Putting aside the lack of textual support for this approach, the Court of Appeals' approach would prove unworkable to creditors and, more importantly, lead to significant confusion for consumers. Under the Court of Appeals' rule, a consumer would be able to decipher if a charge is considered a "finance charge" or an "other charge" each month only by recalling the details of the particular transaction that caused the consumer to exceed his credit limit. In most cases, the consumer would not even know the relevant facts, which are contingent on the nature of the authorization given by the creditor to the merchant. Moreover, the distinction between "unilateral" acts of default and acts of default where a consumer exceeds his credit limit (but has not thereby renegotiated his credit limit and is still subject to the over-limit fee) is based on a fundamental misunderstanding of the workings of the credit card industry. As the Board explained below, a creditor's "authorization" of a particular point-of-sale transaction does not represent a final determination that a particular transaction is within a consumer's credit limit because the authorization system is not suited to identify instantaneously and accurately over-limit transactions. Brief for Board of Governors of Federal Reserve System as Amicus Curiae in No. 00-4213 (CA6), pp. 7-9.

Congress has authorized the Board to make "such classifications, differentiations, or other provisions, and [to] provide for such adjustments and exceptions for any class of transactions, *245 as in the judgment of the Board are necessary or proper to effectuate the purposes of [TILA], to prevent circumvention or evasion thereof, or to facilitate compliance therewith." § 1604(a). Here, the Board has accomplished all of these objectives by setting forth a clear, easy to apply (and easy to enforce) rule that highlights the charges the Board determined to be most relevant to a consumer's credit decisions. The judgment of the Court of Appeals is therefore reversed.

It is so ordered.