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. Methods and periods. Accounts opened by an executor in the name of a decedent's estate. First tier. Average daily balance accounts. 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. Interest will be compounded [on a ____ basis/every (time period)]. 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. For pur-poses of the advertising requirements in 1030.8 of this part, the term also in-cludes an account at a depository insti- Disclosing when rates will be determined. Examples. 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]. Institutions must state the amount of interest that accrued during the statement period, even if it was not credited. Limits on withdrawals or deposits during the term of a time account. 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. Institutions must use consistent terminology to describe terms or features required to be disclosed. 4. Fees for ATM or electronic transfer services (such as preauthorized transfers or home banking services) not required to obtain an account. 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). 5. Part II. Transaction and service fees that consumers reasonably expect to be imposed on a regular basis. 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. 1. They illustrate ways of adapting the model clauses to specific accounts. Institutions using the special annual percentage yield earned formula must use the actual number of days in the compounding period. General. 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). 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. 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. iii. Tiered-rate accounts. 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. 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 (using the formula above) is 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. 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.). v. By using inserts to a document or filling in blanks. General. One, three, and five year CDs available.. Compliance with Regulation E (12 CFR Part 1005) is deemed to satisfy the disclosure requirements of this part, such as when: i. 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. 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. Other accounts. 4. 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. 1. Format. 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. iii. (a)(2) Determination of minimum balance to earn interest. 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. Club accounts. Relation to Regulation CC. 2. Truth in Savings Act (Reg DD) TISA was designed to enable consumers to make informed decisions about bank accounts. 6103(a). Sole proprietors. 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. The interest rate and annual percentage yield have not yet been determined. iv. This is an automated process for Stepped-rate accounts. Payment of interest. 1. You must maintain a minimum balance of $____ in the account each day to obtain the disclosed annual percentage yield. 4. Representative examples. Maturity of time 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. 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 __%. Institutions must pay interest on the full balance in the account that meets the required minimum balance. The composite interest rate and APY are both 6.00%. ii. 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. 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. Determining interest rates. 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. 5. (5) Transaction limitations. Waiver or reduction of a fee or absorption of expenses. Fees imposed to deposit, withdraw, or transfer funds, including per-check or per-transaction charges (for example, $.25 for each withdrawal, whether by check or in person). (i) A deposit that the depositor does not have a right and is not permitted to make withdrawals from within six days after the date of deposit unless the deposit is subject to an early withdrawal penalty of at least seven days' simple interest on amounts withdrawn within the first six days after deposit. (iii) When interest begins to accrue. 1. 1. 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. 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. Regulation DD: What it is, How it Works, FAQ - Investopedia This document is available in the following developer friendly formats: Information and documentation can be found in our Nonrollover time accounts. It includes time, demand, savings, and negotiable order of withdrawal 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. 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. Deeming an account closed. Choosing an item from Reg DD: Disclosures and Payment of Interest - American Bankers Association 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. 1. Providing information about the payment of overdrafts in 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; (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. Effective date. An institution may use an additional method that is unequivocally beneficial to the consumer. 1360 of the interest rateas long as it is applied 365 days a year. Institutions need not highlight terms that changed since the last account disclosures were provided. 1. 1. vi. Examples. Free for limited time. 3. General. This assumption shall not be used if an institution requires, as a condition of the account, that consumers withdraw interest during the term. (6) Features of time accounts. If an institution provides notice through revised account disclosures, the changed term must be highlighted in some manner. The sample forms (B4 through B8) serve a purpose different from the model clauses. Internet advertisements. Examples of advertisements that would ordinarily be misleading, inaccurate, or misrepresent the deposit contract are: i. Effective: July 1, 1982 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. 8. 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). Withdrawal of principal. 7. No interpretations will be issued approving depository institutions' forms, statements, or calculation tools or methods. iii. the hierarchy of the document. 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. Modifications. No notice under this section is required for: (i) Variable-rate changes. Interest earned is the actual amount of interest earned on the account for the period. Other investments. 5. Your account will mature in (time period). Stop-payment fees and fees associated with checks returned unpaid. An advertisement shall not: (1) Be misleading or inaccurate or misrepresent a depository institution's deposit contract; or. Pressing enter in the search box 1. 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. 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. 20, 2023]. 1. 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. De minimis rule. 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. Learn more about the eCFR, its status, and the editorial process. 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. Fees for special services, such as stop-payment 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. A time account that does not automatically rollover is renewed by a consumer. Notice of reversal of a determination will be published in the Federal Register and a copy furnished to the appropriate state official. A certificate of deposit permitting one or more rate adjustments prior to maturity at the consumer's option is a variable-rate account. For example, if a check is debited to an account on a Tuesday, the institution must accrue interest on those funds through Monday. If an account is held by more than one consumer, disclosures may be made to any one of the consumers. 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).