what accounts are covered by reg dd

1. Examples. (5) Effect of fees. Paying interest for the period based on the lowest balance in the account for any day in that period (the low balance method). The Bureau reserves the right to reverse a determination for any reason bearing on the coverage or effect of state or federal law. 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. (The abbreviation APY may be used provided the term annual percentage yield is stated at least once in the advertisement.) IRAs and SEP accounts are consumer accounts to the extent that funds are invested in covered accounts. Indoor signs include advertisements displayed on computer screens, banners, preprinted posters, and chalk or peg boards. This table of contents is a navigational tool, processed from the 3. (2) Requests. 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. Fees not required to be disclosed under 1030.4(b)(4). This repetition of headings to form internal navigation links Unfortunately, the U.S. economy is not immune to financial crises. See comment 4(b)(4)-5 of this part. For national banks: 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. (a) Authority. An institution must describe the circumstances under which it will not pay an overdraft. General requests. Accounts established to make periodic disbursements on construction loans. (c) Disclosure of account balances. 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. 12 CFR 204.2(e) (definition of ''transaction account''). 4. A response to an oral inquiry (by telephone or in person) Start Printed Page 79299about rates and yields or fees does not trigger the duty to provide account disclosures. Reg. DD | Bankers Online FDIC: Financial Products that Are Not Insured by the FDIC 4. Deposit accounts opened as a condition of obtaining a credit card. Limits on withdrawals or deposits during the term of a time account. 1. (1) Balance on which interest is calculated. 3201 et seq., Public Law 102-242, 105 Stat. Incidental fees, such as fees associated with state escheat laws, garnishment or attorneys fees, and fees for photocopying. establishing the XML-based Federal Register as an ACFR-sanctioned 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 method applies a periodic rate to the average daily balance in the account for the period. 1. The Truth in Savings Act, Regulation DD, was enacted to help consumers understand the terms and conditions on which interest is paid and fees are assessed. 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. 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. Calculation of each annual percentage yield is similar for this type of account as for accounts with a single interest rate. 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. We use the average daily balance method to calculate interest on your account. 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. All advertisements are subject to the rule against misleading or inaccurate advertisements, even though the disclosures applicable to various media differ. For example, if no interest is earned for a statement period, institutions need not state that fact. Advertisements include commercial messages in visual, oral, or print media that invite, offer, or otherwise announce generally to prospective customers the availability of consumer accountssuch as: ii. Any interest rates stated must appear in conjunction with the applicable annual percentage yields for each tier. The purpose of this part is to enable consumers to make informed decisions about accounts at depository institutions. 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. (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. 6. For example, if a check is debited to an account on a Tuesday, the institution must accrue interest on those funds through Monday. 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. Principal is the amount of funds assumed to have been deposited at the beginning of the account. 1. It the account is closed prior to the last day of the month, interest accrued but not credited will be forfeited. 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. Deposit accounts opened as a condition of obtaining a credit card. [6], The TISA, as amended, authorizes the Bureau to issue regulations to carry out the provisions of TISA. iii. 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. 2. For members who maintain multiple accounts with direct deposit and have an average balance of at least $XX,XXX, were going to rebate X% of each debit card purchase, up to $100 per year. 2. This method applies a daily periodic rate to the principal in the account each day. headings within the legal text of Federal Register documents. (iv) The circumstances under which the institution will not pay an overdraft. Transfer services. v. By using inserts to a document or filling in blanks. In itemizing fees imposed more than once in the period, institutions may group fees if they are the same type. All Rights Reserved. Automated systems. 1. In that case, for the high end of the third tier the annual percentage yield, using the simple formula, is 5.91%: Thus, the annual percentage yield range that would be stated for the third tier is 5.61% to 5.91%. 7. Itemization of fees. ii. Disclosures required by and provided in accordance with the Electronic Fund Transfer Act (15 U.S.C. v. Messages that are provided along with information about the consumer's existing account and that promote another account at the institution. (See Appendix A, Part I, Paragraph C.). 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. Accounts held by individuals as sole proprietors are not covered. 3. Other fees. Negative balances prohibited. 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. Or, using the simple formula above (since, as an account without a stated term, the term is deemed to be 365 days): (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]. The interest rate will never be [less/more] than __%; or. 1. 1. For the high end of the Start Printed Page 79285third tier, therefore, the annual percentage yield, using the simple formula, is 5.87%. provide legal notice to the public or judicial notice to the courts. Items that are not a bonus include discount coupons for goods or services at restaurants or stores. 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). Conforming edits have been made to internal cross-references and addresses for filing applications and notices. Covered accounts. Section 270 of the act (12 U.S.C. 2. 1. Interest will begin to accrue no later than the business day we receive provisional credit for the deposit of noncash items (for example, checks) into your account. 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. 1. 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. Coffee mugs, T-shirts or other merchandise with a market value of $10 or less. Or it could be a variable rate 'savings product' with an annual rate change. 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 accountseven though consumers may withdraw funds from the club account at the end of the current club period. You can make an appointment to inspect the documents by telephoning (202) 435-7275. The TISA was enacted in December 1991 as subtitle F of the Federal Deposit Insurance Corporation Improvement Act of 1991. Or, earn a 5.25% APY for a three-year CD.. the Federal Register. The Bureau's OMB control number for this information collection is: 3170-0004. 2. 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.. 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. 3. In a leap year a daily rate of 1/366 of the interest rate may be used. Rate Information:The Interest Rate (at which interest is paid on the principal balance) is 0.15%and the Annual Percentage Yield (at which an account would earn interest each year if all interest paid on the account remains in the account) is 0.15%. 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. These Start Printed Page 79278changes 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. 11. 4. A time account that does not automatically rollover is renewed by a consumer. FDIC | Banker Resource Center: Brokered Deposits 5. (ii) Effect of closing an account. As an alternative to the notice described in paragraph (c)(1) of this section, institutions may provide account disclosures to consumers. I am using the Website Compliance Checklist that is available on BankersOnline. Established and maintained procedures for paying interest and providing timely disclosures as required by the regulation, and. Special Formula for Use Where Periodic Statement Is Sent More Often Than the Period for Which Interest Is Compounded, B-1Model Clauses for Account Disclosures, (iii) To Obtain the Annual Percentage Yield Disclosed, (e) Accrual of Interest on Noncash Deposits, (h) Disclosures Relating to Time Accounts, (iii) Withdrawal of Interest Prior to Maturity, (1) Automatically Renewable Time Accounts, (2) Non-Automatically Renewable Time Accounts, B-3Model 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, (b) Non-Automatically Renewable Time Accounts With Maturities Longer Than One Year, Section 1030.1 Authority, purpose, coverage, and effect on state laws, Section 1030.3General Disclosure Requirements, Section 1030.6Periodic Statement Disclosures, Section 1030.9Enforcement and Record Retention, Section 1030.11Additional Disclosures Regarding the Payment of Overdrafts, B-1Model Clauses for Account Disclosures, B-1(h) Disclosures Relating to Time Accounts, B-6Sample Form (Tiered-Rate Money Market Account), https://www.federalregister.gov/d/2011-31727, MODS: Government Publishing Office metadata, Title 12 of the Code of Federal Regulations. As an initial matter, the Board's existing regulation was a result of notice-and-comment rulemaking to the extent required. Annual Percentage Yield for Account Disclosures and Advertising Purposes, B. Stepped-Rate Accounts (Different Rates Apply in Succeeding Periods), D. Tiered-Rate Accounts (Different Rates Apply to Specified Balance Levels), E. Time Accounts With a Stated Maturity Greater Than One Year That Pay Interest at Least Annually, Part II. electronic version on GPOs govinfo.gov. Limitations. 1. Daily balance accounts. Days in period is the actual number of days for the period. 2. Fees for ATM or electronic transfer services (such as preauthorized transfers or home banking services) not required to obtain an account. 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. The Bureau is issuing this interim final rule pursuant to its authority under TISA and the Dodd-Frank Act. (r) State means a state, the District of Columbia, the commonwealth of Puerto Rico, and any territory or possession of the United States. Design requirements. Answer: "DBA" indicates it would be a business account, and 1030.2 (a) and (h) tell us Reg DD is designed to protect consumers who open an account for personal, family or household purposes. [15] iii. Stepped-rate accounts. You will be paid this rate [for (time period)/until (date)]. A statement that fees could reduce the earnings on the account. BankersOnline.com - For bankers. 2. (f) Rounding and accuracy rules for rates and yields. The clauses shown relate only to the specific transactions described. Regulation D is a federal rule regulating how banks and credit unions manage your savings deposits. Fees for electronic fund transfers and fees for other services, such as balance-inquiry or maintenance fees. Accounts denominated in a foreign currency. Increase in fees. This section does not require institutions to compound or credit interest at any particular frequency. Fees for overdrawing an account. The advertising rules do not cover an oral response to a question about rates. The annual percentage yield, the annual percentage yield earned, and the interest rate shall be rounded to the nearest one-hundredth of one percentage point (.01%) and expressed to two decimal places. 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. It also includes fees charged when there are insufficient funds because previously deposited funds are subject to a hold or are uncollected. This version is the current regulation Search this regulation 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. (1) Rounding. 1. iii. First Internet Bank (First IB, the Bank, we) attests the information in this disclosure is accurate as of 6/27/2023. Retail sweep programs. (iii) Short-term time accounts. Leap year. Disclosures for opening accounts. 29(g)). The notice shall be mailed or delivered at least 30 calendar days before the effective date of the change. (D) Any limitation on the amount the interest rate may change. In addition to the interest rate and annual percentage yield, institutions may disclose a periodic rate corresponding to the interest rate. 8. A minimum balance fee of $__ will be imposed every (time period) if the balance in the account falls below $__ any day of the (time period). Persons who advertise accounts are subject to the advertising rules. 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. New account disclosures must be provided when: i. Use the PDF linked in the document sidebar for the official electronic format. Is the bank required to disclose that a bonus paid will be considered interest and be reported on a 1099-Misc? Official status. 2. It includes time, demand, savings, and negotiable order of withdrawal accounts. Limits on the number of checks that may be written on an account within a given time period. Disability insurance premiums valued at an amount of $10 or less per year. 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. The annual percentage yield earned would be shown on the periodic statement for November. iii. 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. On (date), the cost of (type of fee) will increase to $__. iii. 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. 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. 1503 & 1507. (ii) Timing of electronic disclosures. The exemption for advertisements made through broadcast or electronic media does not extend to advertisements posted on the Internet or sent by email. This document has been published in the Federal Register. 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. Rate disclosures. 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. It includes time, demand, savings, and negotiable order of withdrawal accounts. 3. 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. General. 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. Reg D and Reg DD | For Bankers. From Bankers - Bankers Online As discussed above in part III, a notice of proposed rulemaking is not required for this rulemaking. The 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. 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. This account will not renew automatically at maturity. (c) Date interest begins to accrue. 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. Branches of foreign institutions located in the United States are subject to the regulation if they offer deposit accounts to consumers. Register documents. 4. Subsection 707.2 (a) defines "accounts" under the regulation to include a share or deposit account held by or offered to a "member" or potential "member." "Member" is defined in paragraph 707.2 (p) to solely include "natural persons." A natural person is an individual, not legal entity members such as LLCs and corporations. Institutions may use terminology such as returned item fee or NSF fee to describe fees for returning items unpaid. Institutions may rely on the valuation standard used by the Internal Revenue Service to determine if the value of the item is de minimis. 3. Bonuses do not Start Printed Page 79298include 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. Retail sweep programs are generally not established for the purpose of covering overdrafts. 3. 6. Section 204.2(d) of Regulation D defines a savings account as an account that, under the terms of the deposit contract or by practice of the depository institution, permits the depositor to make "no more than six transfers and withdrawals, or a combination of such transfers and withdrawals, per calendar month or statement cycle (or similar . and have been assigned OMB No. 1. (B) State the maturity of a time account as a term rather than a date. 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. 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). 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. State that rate changes are within the institution's discretion, if the institution does not tie changes to an index. 4. 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. This assumption shall not be used if an institution requires, as a condition of the account, that consumers withdraw interest during the term. Institutions are not required to provide rate information orally. I was reading some compliance discussions that noted if the credit/rebate is tied to a service instead of just opening and maintaining an account, then it would not be considered a bonus or need to be reported on a 1099-INT. ii. 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. Requirements for disclosures, periodic statements, payment of interest, advertising, record retention, enforcement and electronic communications are also covered. An interest rate of __% will be paid only for that portion of your [daily balance/average daily balance] that is greater than $__. If the change is initiated by the institution, the disclosure requirements of this paragraph apply. 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. On more than one document, as long as the documents are provided at the same time. 4309) contains the provisions relating to administrative sanctions for failure to comply with the requirements of the act and this part. , 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. 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. 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.
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