§ 1637. Open end consumer credit plans
(a)
Required disclosures by creditor
Before opening any account under an open end consumer credit plan, the creditor shall disclose to the person to whom credit is to be extended each of the following items, to the extent applicable:
(1)
The conditions under which a finance charge may be imposed, including the time period (if any) within which any credit extended may be repaid without incurring a finance charge, except that the creditor may, at his election and without disclosure, impose no such finance charge if payment is received after the termination of such time period. If no such time period is provided, the creditor shall disclose such fact.
(3)
The method of determining the amount of the finance charge, including any minimum or fixed amount imposed as a finance charge.
(4)
Where one or more periodic rates may be used to compute the finance charge, each such rate, the range of balances to which it is applicable, and the corresponding nominal annual percentage rate determined by multiplying the periodic rate by the number of periods in a year.
(5)
Identification of other charges which may be imposed as part of the plan, and their method of computation, in accordance with regulations of the Board.
(6)
In cases where the credit is or will be secured, a statement that a security interest has been or will be taken in
(7)
A statement, in a form prescribed by regulations of the Board of the protection provided by sections
1666 and
1666i of this title to an obligor and the creditor’s responsibilities under sections
1666a and
1666i of this title. With respect to one billing cycle per calendar year, at intervals of not less than six months or more than eighteen months, the creditor shall transmit such statement to each obligor to whom the creditor is required to transmit a statement pursuant to subsection (b) of this section for such billing cycle.
(b)
Statement required with each billing cycle
The creditor of any account under an open end consumer credit plan shall transmit to the obligor, for each billing cycle at the end of which there is an outstanding balance in that account or with respect to which a finance charge is imposed, a statement setting forth each of the following items to the extent applicable:
(2)
The amount and date of each extension of credit during the period, and a brief identification, on or accompanying the statement of each extension of credit in a form prescribed by the Board sufficient to enable the obligor either to identify the transaction or to relate it to copies of sales vouchers or similar instruments previously furnished, except that a creditor’s failure to disclose such information in accordance with this paragraph shall not be deemed a failure to comply with this part or this subchapter if
(A)
the creditor maintains procedures reasonably adapted to procure and provide such information, and
(B)
the creditor responds to and treats any inquiry for clarification or documentation as a billing error and an erroneously billed amount under section
1666 of this title. In lieu of complying with the requirements of the previous sentence, in the case of any transaction in which the creditor and seller are the same person, as defined by the Board, and such person’s open end credit plan has fewer than 15,000 accounts, the creditor may elect to provide only the amount and date of each extension of credit during the period and the seller’s name and location where the transaction took place if
(B)
the creditor responds to and treats any inquiry for clarification or documentation as a billing error and an erroneously billed amount under section
1666 of this title.
(4)
The amount of any finance charge added to the account during the period, itemized to show the amounts, if any, due to the application of percentage rates and the amount, if any, imposed as a minimum or fixed charge.
(5)
Where one or more periodic rates may be used to compute the finance charge, each such rate, the range of balances to which it is applicable, and, unless the annual percentage rate (determined under section
1606
(a)(2) of this title) is required to be disclosed pursuant to paragraph (6), the corresponding nominal annual percentage rate determined by multiplying the periodic rate by the number of periods in a year.
(6)
Where the total finance charge exceeds 50 cents for a monthly or longer billing cycle, or the pro rata part of 50 cents for a billing cycle shorter than monthly, the total finance charge expressed as an annual percentage rate (determined under section
1606
(a)(2) of this title), except that if the finance charge is the sum of two or more products of a rate times a portion of the balance, the creditor may, in lieu of disclosing a single rate for the total charge, disclose each such rate expressed as an annual percentage rate, and the part of the balance to which it is applicable.
(7)
The balance on which the finance charge was computed and a statement of how the balance was determined. If the balance is determined without first deducting all credits during the period, that fact and the amount of such payments shall also be disclosed.
(9)
The date by which or the period (if any) within which, payment must be made to avoid additional finance charges, except that the creditor may, at his election and without disclosure, impose no such additional finance charge if payment is received after such date or the termination of such period.
(10)
The address to be used by the creditor for the purpose of receiving billing inquiries from the obligor.
(11)
(A)
A written statement in the following form: “Minimum Payment Warning: Making only the minimum payment will increase the amount of interest you pay and the time it takes to repay your balance.”, or such similar statement as is established by the Board pursuant to consumer testing.
(B)
Repayment information that would apply to the outstanding balance of the consumer under the credit plan, including—
(i)
the number of months (rounded to the nearest month) that it would take to pay the entire amount of that balance, if the consumer pays only the required minimum monthly payments and if no further advances are made;
(ii)
the total cost to the consumer, including interest and principal payments, of paying that balance in full, if the consumer pays only the required minimum monthly payments and if no further advances are made;
(iii)
the monthly payment amount that would be required for the consumer to eliminate the outstanding balance in 36 months, if no further advances are made, and the total cost to the consumer, including interest and principal payments, of paying that balance in full if the consumer pays the balance over 36 months; and
(C)
(i)
Subject to clause (ii), in making the disclosures under subparagraph (B), the creditor shall apply the interest rate or rates in effect on the date on which the disclosure is made until the date on which the balance would be paid in full.
(ii)
If the interest rate in effect on the date on which the disclosure is made is a temporary rate that will change under a contractual provision applying an index or formula for subsequent interest rate adjustment, the creditor shall apply the interest rate in effect on the date on which the disclosure is made for as long as that interest rate will apply under that contractual provision, and then apply an interest rate based on the index or formula in effect on the applicable billing date.
(D)
All of the information described in subparagraph (B) shall—
(E)
In the regulations prescribed under subparagraph (D), the Board shall require that the disclosure of such information shall be in the form of a table that—
(12)
Requirements relating to late payment deadlines and penalties.—
(A)
Late payment deadline required to be disclosed.—
In the case of a credit card account under an open end consumer credit plan under which a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment, the periodic statement required under subsection (b) with respect to the account shall include, in a conspicuous location on the billing statement, the date on which the payment is due or, if different, the date on which a late payment fee will be charged, together with the amount of the fee or charge to be imposed if payment is made after that date.
(B)
Disclosure of increase in interest rates for late payments.—
If 1 or more late payments under an open end consumer credit plan may result in an increase in the annual percentage rate applicable to the account, the statement required under subsection (b) with respect to the account shall include conspicuous notice of such fact, together with the applicable penalty annual percentage rate, in close proximity to the disclosure required under subparagraph (A) of the date on which payment is due under the terms of the account.
(C)
Payments at local branches.—
If the creditor, in the case of a credit card account referred to in subparagraph (A), is a financial institution which maintains branches or offices at which payments on any such account are accepted from the obligor in person, the date on which the obligor makes a payment on the account at such branch or office shall be considered to be the date on which the payment is made for purposes of determining whether a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment.
(c)
Disclosure in credit and charge card applications and solicitations
(1)
Direct mail applications and solicitations
(A)
Information in tabular format
Any application to open a credit card account for any person under an open end consumer credit plan, or a solicitation to open such an account without requiring an application, that is mailed to consumers shall disclose the following information, subject to subsection (e) of this section and section
1632
(c) of this title:
(i)
Annual percentage rates
(ii)
Annual and other fees
(I)
Any annual fee, other periodic fee, or membership fee imposed for the issuance or availability of a credit card, including any account maintenance fee or other charge imposed based on activity or inactivity for the account during the billing cycle.
(iii)
Grace period
(iv)
Balance calculation method
(2)
Telephone solicitations
(A)
In general
In any telephone solicitation to open a credit card account for any person under an open end consumer credit plan, the person making the solicitation shall orally disclose the information described in paragraph (1)(A).
(B)
Exception
Subparagraph (A) shall not apply to any telephone solicitation if—
(3)
Applications and solicitations by other means
(A)
In general
Any application to open a credit card account for any person under an open end consumer credit plan, and any solicitation to open such an account without requiring an application, that is made available to the public or contained in catalogs, magazines, or other publications shall meet the disclosure requirements of subparagraph (B), (C), or (D).
(B)
Specific information
An application or solicitation described in subparagraph (A) meets the requirement of this subparagraph if such application or solicitation contains—
(i)
the information—
(ii)
a statement, in a conspicuous and prominent location on the application or solicitation, that—
(iii)
a clear and conspicuous disclosure of the date the application or solicitation was printed; and
(iv)
a disclosure, in a conspicuous and prominent location on the application or solicitation, of a toll free telephone number or a mailing address at which the applicant may contact the creditor to obtain any change in the information provided in the application or solicitation since it was printed.
(C)
General information without any specific term
An application or solicitation described in subparagraph (A) meets the requirement of this subparagraph if such application or solicitation—
(i)
contains a statement, in a conspicuous and prominent location on the application or solicitation, that—
(D)
Applications or solicitations containing subsection (a) disclosures
An application or solicitation meets the requirement of this subparagraph if it contains, or is accompanied by—
(4)
Charge card applications and solicitations
(A)
In general
Any application or solicitation to open a charge card account shall disclose clearly and conspicuously the following information in the form required by section
1632
(c) of this title, subject to subsection (e) of this section:
(i)
Any annual fee, other periodic fee, or membership fee imposed for the issuance or availability of the charge card, including any account maintenance fee or other charge imposed based on activity or inactivity for the account during the billing cycle.
(B)
Other information
In addition to the information required to be disclosed under subparagraph (A), each written application or solicitation to which such subparagraph applies shall disclose clearly and conspicuously the following information, subject to subsections (e) and (f) of this section:
(C)
Applications and solicitations by other means
Any application to open a charge card account, and any solicitation to open such an account without requiring an application, that is made available to the public or contained in catalogs, magazines, or other publications shall contain—
(i)
the information—
(ii)
a statement, in a conspicuous and prominent location on the application or solicitation, that—
(iii)
a clear and conspicuous disclosure of the date the application or solicitation was printed; and
(iv)
a disclosure, in a conspicuous and prominent location on the application or solicitation, of a toll free telephone number or a mailing address at which the applicant may contact the creditor to obtain any change in the information provided in the application or solicitation since it was printed.
(D)
Issuers of charge cards which provide access to open end consumer credit plans
If a charge card permits the card holder to receive an extension of credit under an open end consumer credit plan, which is not maintained by the charge card issuer, the charge card issuer may provide the information described in subparagraphs (A) and (B) in the form required by such subparagraphs in lieu of the information required to be provided under paragraph (1), (2), or (3) with respect to any credit extended under such plan, if the charge card issuer discloses clearly and conspicuously to the consumer in the application or solicitation that—
(ii)
the charge card may arrive before the decision is made with respect to an extension of credit under an open end consumer credit plan; and
(iii)
approval by the charge card issuer does not constitute approval by the issuer of the extension of credit.
The information required to be disclosed under paragraph (1) shall be provided to the charge card holder by the creditor which maintains such open end consumer credit plan before the first extension of credit under such plan.
(5)
Regulatory authority of the Board
The Board may, by regulation, require the disclosure of information in addition to that otherwise required by this subsection or subsection (d) of this section, and modify any disclosure of information required by this subsection or subsection (d) of this section, in any application to open a credit card account for any person under an open end consumer credit plan or any application to open a charge card account for any person, or a solicitation to open any such account without requiring an application, if the Board determines that such action is necessary to carry out the purposes of, or prevent evasions of, any paragraph of this subsection.
(6)
Additional notice concerning “introductory rates”
(A)
In general
Except as provided in subparagraph (B), an application or solicitation to open a credit card account and all promotional materials accompanying such application or solicitation for which a disclosure is required under paragraph (1), and that offers a temporary annual percentage rate of interest, shall—
(i)
use the term “introductory” in immediate proximity to each listing of the temporary annual percentage rate applicable to such account, which term shall appear clearly and conspicuously;
(ii)
if the annual percentage rate of interest that will apply after the end of the temporary rate period will be a fixed rate, state in a clear and conspicuous manner in a prominent location closely proximate to the first listing of the temporary annual percentage rate (other than a listing of the temporary annual percentage rate in the tabular format described in section
1632
(c) of this title), the time period in which the introductory period will end and the annual percentage rate that will apply after the end of the introductory period; and
(iii)
if the annual percentage rate that will apply after the end of the temporary rate period will vary in accordance with an index, state in a clear and conspicuous manner in a prominent location closely proximate to the first listing of the temporary annual percentage rate (other than a listing in the tabular format prescribed by section
1632
(c) of this title), the time period in which the introductory period will end and the rate that will apply after that, based on an annual percentage rate that was in effect within 60 days before the date of mailing the application or solicitation.
(B)
Exception
Clauses (ii) and (iii) of subparagraph (A) do not apply with respect to any listing of a temporary annual percentage rate on an envelope or other enclosure in which an application or solicitation to open a credit card account is mailed.
(C)
Conditions for introductory rates
An application or solicitation to open a credit card account for which a disclosure is required under paragraph (1), and that offers a temporary annual percentage rate of interest shall, if that rate of interest is revocable under any circumstance or upon any event, clearly and conspicuously disclose, in a prominent manner on or with such application or solicitation—
(i)
a general description of the circumstances that may result in the revocation of the temporary annual percentage rate; and
(D)
Definitions
In this paragraph—
(i)
the terms “temporary annual percentage rate of interest” and “temporary annual percentage rate” mean any rate of interest applicable to a credit card account for an introductory period of less than 1 year, if that rate is less than an annual percentage rate that was in effect within 60 days before the date of mailing the application or solicitation; and
(E)
Relation to other disclosure requirements
Nothing in this paragraph may be construed to supersede subsection (a) of section
1632 of this title, or any disclosure required by paragraph (1) or any other provision of this subsection.
(7)
Internet-based solicitations
(A)
In general
In any solicitation to open a credit card account for any person under an open end consumer credit plan using the Internet or other interactive computer service, the person making the solicitation shall clearly and conspicuously disclose—
(B)
Form of disclosure
The disclosures required by subparagraph (A) shall be—
(C)
Definitions
For purposes of this paragraph—
(i)
the term “Internet” means the international computer network of both Federal and non-Federal interoperable packet switched data networks; and
(ii)
the term “interactive computer service” means any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.
(8)
Applications from underage consumers
(A)
Prohibition on issuance
No credit card may be issued to, or open end consumer credit plan established by or on behalf of, a consumer who has not attained the age of 21, unless the consumer has submitted a written application to the card issuer that meets the requirements of subparagraph (B).
(B)
Application requirements
An application to open a credit card account by a consumer who has not attained the age of 21 as of the date of submission of the application shall require—
(i)
the signature of a cosigner, including the parent, legal guardian, spouse, or any other individual who has attained the age of 21 having a means to repay debts incurred by the consumer in connection with the account, indicating joint liability for debts incurred by the consumer in connection with the account before the consumer has attained the age of 21; or
(d)
Disclosure prior to renewal
(1)
In general
A card issuer that has changed or amended any term of the account since the last renewal that has not been previously disclosed or that imposes any fee described in subsection (c)(1)(A)(ii)(I) or (c)(4)(A)(i) of this section shall transmit to a consumer at least 30 days prior to the scheduled renewal date of the consumer’s credit or charge card account a clear and conspicuous disclosure of—
(A)
the date by which, the month by which, or the billing period at the close of which, the account will expire if not renewed;
(e)
Other rules for disclosures under subsections (c) and (d)
(1)
Fees determined on the basis of a percentage
If the amount of any fee required to be disclosed under subsection (c) or (d) of this section is determined on the basis of a percentage of another amount, the percentage used in making such determination and the identification of the amount against which such percentage is applied shall be disclosed in lieu of the amount of such fee.
(f)
Disclosure of range of certain fees which vary by State allowed
If the amount of any fee required to be disclosed by a credit or charge card issuer under paragraph (1)(B), (3)(B)(i)(II), (4)(B), or (4)(C)(i)(II) of subsection (c) of this section varies from State to State, the card issuer may disclose the range of such fees for purposes of subsection (c) of this section in lieu of the amount for each applicable State, if such disclosure includes a statement that the amount of such fee varies from State to State.
(g)
Insurance in connection with certain open end credit card plans
(1)
Change in insurance carrier
Whenever a card issuer that offers any guarantee or insurance for repayment of all or part of the outstanding balance of an open end credit card plan proposes to change the person providing that guarantee or insurance, the card issuer shall send each insured consumer written notice of the proposed change not less than 30 days prior to the change, including notice of any increase in the rate or substantial decrease in coverage or service which will result from such change. Such notice may be included on or with the monthly statement provided to the consumer prior to the month in which the proposed change would take effect.
(2)
Notice of new insurance coverage
In any case in which a proposed change described in paragraph (1) occurs, the insured consumer shall be given the name and address of the new guarantor or insurer and a copy of the policy or group certificate containing the basic terms and conditions, including the premium rate to be charged.
(3)
Right to discontinue guarantee or insurance
The notices required under paragraphs (1) and (2) shall each include a statement that the consumer has the option to discontinue the insurance or guarantee.
(h)
Prohibition on certain actions for failure to incur finance charges
A creditor of an account under an open end consumer credit plan may not terminate an account prior to its expiration date solely because the consumer has not incurred finance charges on the account. Nothing in this subsection shall prohibit a creditor from terminating an account for inactivity in 3 or more consecutive months.
(i)
Advance notice of rate increase and other changes required
(1)
Advance notice of increase in interest rate required
In the case of any credit card account under an open end consumer credit plan, a creditor shall provide a written notice of an increase in an annual percentage rate (except in the case of an increase described in paragraph (1), (2), or (3) of section
1666i–1
(b) of this title) not later than 45 days prior to the effective date of the increase.
(2)
Advance notice of other significant changes required
In the case of any credit card account under an open end consumer credit plan, a creditor shall provide a written notice of any significant change, as determined by rule of the Board, in the terms (including an increase in any fee or finance charge, other than as provided in paragraph (1)) of the cardholder agreement between the creditor and the obligor, not later than 45 days prior to the effective date of the change.
(3)
Notice of right to cancel
Each notice required by paragraph (1) or (2) shall be made in a clear and conspicuous manner, and shall contain a brief statement of the right of the obligor to cancel the account pursuant to rules established by the Board before the effective date of the subject rate increase or other change.
(4)
Rule of construction
Closure or cancellation of an account by the obligor shall not constitute a default under an existing cardholder agreement, and shall not trigger an obligation to immediately repay the obligation in full or through a method that is less beneficial to the obligor than one of the methods described in section
1666i–1
(c)(2) of this title, or the imposition of any other penalty or fee.
(j)
Prohibition on penalties for on-time payments
(1)
Prohibition on double-cycle billing and penalties for on-time payments
Except as provided in paragraph (2), a creditor may not impose any finance charge on a credit card account under an open end consumer credit plan as a result of the loss of any time period provided by the creditor within which the obligor may repay any portion of the credit extended without incurring a finance charge, with respect to—
(k)
Opt-in required for over-the-limit transactions if fees are imposed
(1)
In general
In the case of any credit card account under an open end consumer credit plan under which an over-the-limit fee may be imposed by the creditor for any extension of credit in excess of the amount of credit authorized to be extended under such account, no such fee shall be charged, unless the consumer has expressly elected to permit the creditor, with respect to such account, to complete transactions involving the extension of credit under s