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Regulation DD
(a) Change in terms —
See interpretation of 5(a) Change in terms. in Supplement I
(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.
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.”
See interpretation of 5(a)(1) Advance notice required. in Supplement I
(2) No notice required. No notice under this section is required for:
See interpretation of 5(a)(2) No notice required. in Supplement I
(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.
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.
See interpretation of 5(a)(2)(ii) Check printing fees. in Supplement I
(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. 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 “one-month” 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 six-month 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.
See interpretation of 5(b) Notice before maturity for time accounts longer than one month that renew automatically. in Supplement I
(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.
1. Highlighting changed terms. Institutions need not highlight terms that changed since the last account disclosures were provided.
See interpretation of 5(b)(1) Maturities of longer than one year. in Supplement I
(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.
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.
See interpretation of 5(c) Notice before maturity for time accounts longer than one year that do not renew automatically. in Supplement I
As someone deeply versed in the field of financial regulations, particularly in the context of depository institutions, I can affirm that the information provided in the excerpt pertains to Regulation DD, which is a set of rules outlined in the Consumer Financial Protection Bureau's (CFPB) regulations. Regulation DD, also known as the Truth in Savings Act (TISA), is designed to ensure transparency in the disclosure of terms and conditions related to deposit accounts, allowing consumers to make informed decisions.
Let's break down the key concepts and elements discussed in the provided text:
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Change in Terms (Section 5(a)):
- Depository institutions must give advance notice to affected consumers regarding any change in a term required to be disclosed under §1030.4(b) of Regulation DD.
- The notice must be provided at least 30 calendar days before the effective date of the change.
- The form of notice can be through periodic statements, revised account disclosures, or other mailings, with the changed term highlighted.
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Examples of Changes Not Requiring Notice (Section 5(a)(2)):
- Certain changes do not require advance notice, including variable-rate changes, changes in check printing fees, and changes in terms for short-term time accounts.
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Notice Before Maturity for Time Accounts Longer Than One Month (Section 5(b)):
- For time accounts with maturities longer than one month that renew automatically, institutions must provide disclosures at least 30 calendar days before maturity.
- Disclosures include information on maturity dates, determining when rates will be available, and alternative timing rules for providing disclosures.
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Notice Before Maturity for Time Accounts Longer Than One Year (Section 5(b)(1)):
- For maturities longer than one year, institutions shall provide account disclosures for the new account, including the maturity date and, if known, the interest rate and annual percentage yield.
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Notice Before Maturity for Time Accounts That Do Not Renew Automatically (Section 5(c)):
- For time accounts longer than one year that do not renew automatically, institutions must disclose the maturity date and whether interest will be paid after maturity at least 10 calendar days before maturity.
It's crucial for depository institutions to adhere to these regulations to ensure fair and transparent practices, ultimately empowering consumers to make informed decisions about their financial accounts.
