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 daily interest earned carried to five or more decimal places, Part II. Disclosures for each account offered by a credit union may be presented separately or combined with disclosures for the credit union's other accounts, as long as it is clear which disclosures are applicable to the member or potential member's account. They may do so even though no monthly statement was issued during a specific quarter. Before this proposed rule, NCUA estimated the annual burden to be 12,076,057 hours. Third tier. Since then, several amendments have been made to Regulation DD and the Staff Commentary, including changes, Currently, 707.11(a) requires credit unions that promote the payment of overdrafts in an advertisement to provide on periodic statements the aggregate dollar amount totals for overdraft fees and, for returned item fees, the aggregate totals for both the statement period and the calendar year-to-date. The rationale underlying the ten-day grace period is credit unions cannot provide written disclosures immediately when, for example, an account is opened by telephone. If the member is not enrolled in the credit union's overdraft service, but has a line of credit or other overdraft alternative, the additional balance could continue to include funds available pursuant to that other alternative. The collection of information that would be revised by this rulemaking is found in 12 CFR part 707 and Appendix C. This collection is mandatory to evidence compliance with the requirements of part 707 and TISA. 4. Although periodic statements are not required under TISA, credit unions that provide periodic statements must disclose fees or charges imposed on a member account during the statement period. By clicking the 'Subscribe Now' button, you agree to our Terms of Use and Privacy Policy. Except as provided in Part I.E. The proposed rule would permit, but does not require, disclosure of an additional balance that includes these additional overdraft funds, which may be useful to some members. Automated systems. For the high end of the third tier, therefore, the annual percentage yield, using the simple formula, is 5.87%. Credit unions may delay delivering disclosures if a member or potential member is not present at the credit union when the account is opened or service is provided. The Joint Guidance stated that, if more than one balance is provided, a Start Printed Page 13135credit union should separately (and prominently) identify the balance without the inclusion of overdraft protection. 70 FR at 9132. The final rule includes format requirements to help make the aggregate fee disclosures more effective and noticeable to consumers. The regulatory requirement is to state the rate of return in conjunction with, but not more conspicuously than, the APY, and this rule applies in the electronic context as well. . Truth in Savings Background Regulation DD, which implements the Truth in Savings Act (TISA) (12 USC 4301 et seq. 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). An official staff commentary interprets the requirements of Regulation DD (12 CFR 230 (Supplement I)). Section 707.10 is removed and reserved. The safe harbors would provide additional certainty to credit unions in determining whether compliance with the rule is required in particular circumstances. Dear Mr. Payne: You have asked whether credit unions may deliver statements, notices, and disclosures electronically under the Truth In Savings Act (TISA). 70 FR 9127 (February 24, 2005) (Joint Guidance). of this title. The Act is so designed where the consumers compare the disclosures among the competing banks. Part 707 of the NCUA Rules and Regulations implements the Truth in Savings Act of 1991 (TISA), contained in the Federal Deposit Insurance Corporation Improvement Act of 1991, 12 U.S.C. You can click on the 'unsubscribe' link in the email at anytime. See interpretation of Appendix A
in Supplement I. 72 FR 63477 (November 9, 2007). Annual percentage yield is the return rate in case the interest is reinvested till the term ends. This regulation applies to all types of credit unions, not just federally-insured credit unions. the Federal Register. Second tier. Additional disclosure requirements for overdraft services. NCUA is proposing to delete 707.3(g) for the same reasons it proposes to delete 707.10, as discussed below. Comments Close: 08/06/2004 Document Type: Proposed Rule Document Citation: 69 FR 31760 Page: For purposes of the examples discussed below, assume the following: Tiering Method A. The final rule permits an institution to disclose an additional balance that includes funds provided by a discretionary overdraft service or a line of credit, or funds that could be transferred from a consumer's linked individual or joint account, so long as the institution prominently states the balance includes these additional amounts.[4]. The FRB's most recent final rule will not be effective until January 1, 2010, and the Board wants to permit credit unions to comment on the proposed changes to the TISA rule and allow sufficient time for necessary operational adjustments. As required by the Truth in Savings Act (TISA), NCUA is proposing to amend its TISA rule and official staff interpretation to align it with the Federal Reserve Board's Regulation DD. 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. Additionally, the proposed commentary would clarify that the aggregate fee total does not include fees for transferring funds from another member account to avoid an overdraft, or fees charged under a service subject to 12 CFR part 226 (Regulation Z). The existing exemption in 707.11(b)(2) from these disclosures for ATM receipts would also continue to apply. 12 U.S.C. 4301 et seq. Part I. Id. Incorrect. 1216, which is classified generally to chapter 14 (1751 et seq.) Effect on State law 4313. The regulation does not require a credit union to provide, nor a member or potential member to agree to receive, the disclosures required by 707.4(a)(2) in electronic form. 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. (2) Requests. In accordance with the Paperwork Reduction Act of 1995, 44 U.S.C. The average daily balance for the period is $1,000. The Board believes uniform proximity requirements are necessary to enable members to find fee information easily so they better understand the costs of using the service. The consumers are protected where clear and uniform disclosure of terms of interests is required along with fees while opening a new savings account. L. 102-242, 105 Stat. Specifically, the rule would amend the provisions and provide guidance on the electronic delivery of disclosures. contained less than a hundred pages in the final form. Truth In Savings Act (TISA) - Regulation DD: Final Rule: Effective Date: Comments should be mailed to Jeryl Fish, Paperwork Clearance Officer, National Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314-3428; faxed to (703) 518-6319; or sent by e-mail to regcomments@ncua.gov. (3) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. The annual percentage yield earned would be shown on the periodic statement for November. The annual percentage yield is affected when interest earned is withdrawn by the account holder. US Dollar Value Is Plummeting What Does This Mean for You? 1030.1 Authority, purpose, coverage, and effect on state laws. Following is the remaining information that is disclosed. In accordance with the E-Sign Act as applied to account-opening disclosures, periodic statements, and change-in-terms notices, the FRB required depository institutions to obtain the consumer's consent, to provide the disclosures in electronic form or else provide written disclosures. Public comments will not be edited to remove any identifying or contact information. The proposed rule would apply only when a credit union chooses to provide balance information, or when an ATM or other electronic terminal has the capability to provide a balance only to the extent balance information is offered on an automated system. The balance disclosure requirement in 707.11(c) applies to any automated system through which the member requests a balance, including, but not limited to, a telephone response system, the credit union's internet site, or an ATM. 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]. In May 2008, NCUA, the FRB, and the Office of Thrift Supervision (OTS) jointly proposed substantive consumer protections under the Federal Trade Commission Act, the so-called unfair and deceptive acts and practices (UDAP) rule that, among other matters, addressed concerns that consumers may not adequately understand the costs of overdraft services or how overdraft services operate generally. The Truth in Savings Act also protects consumers by prohibiting institutions from advertising an account as free (for example, free checking) if there are any hidden requirements, such as maintaining a minimum balance in order to qualify for such an account. The Board requests your comments on whether the rule is understandable and minimally intrusive if implemented as proposed. 12 U.S.C. 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 other words, the credit union has the discretion to provide to the network only balances that exclude overdraft funds. The aggregate fee disclosures would benefit members by showing the total expenditures on overdraft fees for the statement period and year, which may encourage members to explore alternatives that might be less costly. The act requires the bank to compound interest no less than monthly. 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]. A, title II, 2604 (a), Sept. 30, 1996, 110 Stat. Edge Act and agreement corporations, and agencies of foreign . Start Printed Page 13138, (b) Advertising disclosures for overdraft services. 2003-2023 Chegg Inc. All rights reserved. Accordingly, the Board believes it is preferable not to mandate use of any particular means of electronic delivery of disclosures, but instead to allow credit unions to use whatever method may be best suited to particular types of disclosure, for example, account-opening, periodic statements, or change in terms. Section 707.3 is amended by revising paragraph (a), to read as follows, and removing paragraph (g): (a) Form. Section 707.10(e) has required credit unions to take reasonable steps to attempt to redeliver returned electronic disclosures. To inform members about the fees charged for using discretionary overdraft services and to help them better understand the costs associated with their accounts, this proposed rule would expand 707.11(a) to require all credit unions, regardless of whether they promote the payment of overdrafts, to disclose the aggregate fee information for the statement period and calendar year-to-date. Interest Rate vs. APR: How Not Knowing the Difference Can Cost You, Interest Rate Forecast: See What Fed Rate Hikes or Cuts Mean. Depository institutions were also required to disclose separately on their periodic statements the total amount of fees or charges imposed on the account for paying overdrafts and the total amount of fees charged for returning items unpaid. This information collection will be revised to address the requirements of this proposed rule. While credit unions generally do not initially underwrite on an individual account basis when enrolling a member in the service, most Start Printed Page 13131credit unions will review individual accounts periodically to determine if a member continues to qualify for the service, and the amounts that may be covered. Where a member has opted out of the credit union's discretionary overdraft service for some, but not all transactions, e.g., the member has opted out of overdraft services for ATM and debit card transactions, a credit union that includes funds from its discretionary overdraft service in the balance should convey that the overdraft funds are not available for all transactions. 4. that agencies use to create their documents. NCUA estimates that the total, continuing annual burden for the Truth in Savings program to be 12,064,677 hours. electronic version on GPOs govinfo.gov. Sections 707.10(d) and (e) have addressed specific timing and delivery requirements for electronic disclosures, such as the requirement to send disclosures to a member's e-mail address or post the disclosures on a Web site and send a notice alerting the member to the disclosures. This disclosure itemized how much interest customers would earn over a 12-month period, including . This resource is not an official legal edition of the Code of Federal Regulations or the Federal Register, and it does not replace the official versions of those publications. Because the proposed rule would expand the applicability of the aggregate fee disclosures to all credit unions, the existing comment 11(a)(3)-1 would be revised, and comment 11(a)(5)-1 would be deleted. 2 In December 2011, the CFPB restated Truth in Savings Act (NCUA Rules & Regulations Part 707) Other Regulations, Rules, Policies, and Statutes . 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.