[Code of Federal Regulations]

[Title 12, Volume 3]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR226.9]



[Page 286-288]

 

                       TITLE 12--BANKS AND BANKING

 

                   CHAPTER II--FEDERAL RESERVE SYSTEM

 

PART 226_TRUTH IN LENDING (REGULATION Z)--Table of Contents

 

                        Subpart B_Open-End Credit

 

Sec. 226.9  Subsequent disclosure requirements.



    (a) Furnishing statement of billing rights--(1) Annual statement. 

The creditor shall mail or deliver the billing rights statement required 

by Sec. 226.6(d) at least once per calendar year, at intervals of not 

less than 6 months nor more than 18 months, either to all consumers or 

to each consumer entitled to receive a periodic statement under Sec. 

226.5(b)(2) for any one billing cycle.

    (2) Alternative summary statement. As an alternative to paragraph 

(a)(1) of this section, the creditor may mail or deliver, on or with 

each periodic statement, a statement substantially similar to that in 

appendix G.

    (b) Disclosures for supplemental credit devices and additional 

features--(1) If a creditor, within 30 days after mailing or delivering 

the initial disclosures under Sec. 226.6(a), adds a credit feature to 

the consumer's account or mails or delivers to the consumer a credit 

device for which the finance charge terms are the same as those 

previously disclosed, no additional disclosures are necessary. After 30 

days, if the creditor adds a credit feature or furnishes a credit device 

(other than as a renewal, resupply, or the original issuance of a credit 

card) on the same finance charge terms, the creditor shall disclose, 

before the consumer uses the feature or device for the first time, that 

it is for use in obtaining credit under the terms previously disclosed.

    (2) Whenever a credit feature is added or a credit device is mailed 

or delivered, and the finance charge terms for the feature or device 

differ from disclosures previously given, the disclosures required by 

Sec. 226.6(a) that are applicable to the added feature or device shall 

be given before the consumer uses the feature or device for the first 

time.

    (c) Change in terms--(1) Written notice required. Whenever any term 

required to be disclosed under Sec. 226.6 is changed or the required 

minimum periodic payment is increased, the creditor shall mail or 

deliver written notice of the change to each consumer who may be 

affected. The notice shall be mailed or delivered at least 15 days prior 

to the effective date of the change. The 15-day timing requirement does 

not apply if the change has been agreed to by the consumer, or if a 

periodic rate or other finance charge is increased because of the 

consumer's delinquency or default; the notice shall be given, however, 

before the effective date of the change.

    (2) Notice not required. No notice under this section is required 

when the change involves late payment charges, charges for documentary 

evidence, or over-the-limit charges; a reduction of any component of a 

finance or other charge; suspension of future credit privileges or 

termination of an account or plan; or when the change results from an 

agreement involving a court proceeding, or from the consumer's default 

or delinquency (other than an increase in the periodic rate or other 

finance charge).

    (3) Notice for home equity plans. If a creditor prohibits additional 

extensions of credit or reduces the credit limit applicable to a home 

equity plan pursuant to Sec. 226.5b(f)(3)(i) or Sec. 226.5b(f)(3)(vi), 

the creditor shall mail or deliver written notice of the action to each 

consumer who will be affected. The notice must be provided not later 

than three business days after the action is taken and shall contain 

specific reasons for the action. If the creditor requires the consumer 

to request reinstatement of credit privileges, the notice also shall 

state that fact.

    (d) Finance charge imposed at time of transaction. (1) Any person, 

other than the card issuer, who imposes a finance charge at the time of 

honoring a consumer's credit card, shall disclose the



[[Page 287]]



amount of that finance charge prior to its imposition.

    (2) The card issuer, if other than the person honoring the 

consumer's credit card, shall have no responsibility for the disclosure 

required by paragraph (d)(1) of this section, and shall not consider any 

such charge for purposes of Sec. Sec. 226.5a, 226.6 and 226.7.

    (e) Disclosures upon renewal of credit or charge card--(1) Notice 

prior to renewal. Except as provided in paragraph (e)(2) of this 

section, a card issuer that imposes any annual or other periodic fee to 

renew a credit or charge card account of the type subject to Sec. 

226.5a, including any fee based on account activity or inactivity, shall 

mail or deliver written notice of the renewal to the cardholder. The 

notice shall be provided at least 30 days or one billing cycle, 

whichever is less, before the mailing or the delivery of the periodic 

statement on which the renewal fee is initially charged to the account. 

The notice shall contain the following information:

    (i) The disclosures contained in Sec. 226.5a(b) (1) through (7) 

that would apply if the account were renewed;\20a\ and

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    \20a\ These disclosures need not be provided in tabular format or in 

a prominent location.

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    (ii) How and when the cardholder may terminate credit availability 

under the account to avoid paying the renewal fee.

    (2) Delayed notice. The disclosures required by paragraph (e)(1) of 

this section may be provided later than the time in paragraph (e)(1) of 

this section, but no later than the mailing or the delivery of the 

periodic statement on which the renewal fee is initially charged to the 

account, if the card issuer also discloses at that time that:

    (i) The cardholder has 30 days from the time the periodic statement 

is mailed or delivered to avoid paying the fee or to have the fee 

recredited if the cardholder terminates credit availability under the 

account; and

    (ii) The cardholder may use the card during the interim period 

without having to pay the fee.

    (3) Notification on periodic statements. The disclosures required by 

this paragraph may be made on or with a periodic statement. If any of 

the disclosures are provided on the back of a periodic statement, the 

card issuer shall include a reference to those disclosures on the front 

of the statement.

    (f) Change in credit card account insurance provided--(1) Notice 

prior to change. If a credit card issuer plans to change the provider of 

insurance for repayment of all or part of the outstanding balance of an 

open-end credit card account of the type subject to Sec. 226.5a, the 

card issuer shall mail or deliver the cardholder written notice of the 

change not less than 30 days before the change in providers occurs. The 

notice shall also include the following items, to the extent applicable:

    (i) Any increase in the rate that will result from the change;

    (ii) Any substantial decrease in coverage that will result from the 

change; and

    (iii) A statement that the cardholder may discontinue the insurance.

    (2) Notice when change in provider occurs. If a change described in 

paragraph (f)(1) of this section occurs, the card issuer shall provide 

the cardholder with a written notice no later than 30 days after the 

change, including the following items, to the extent applicable:

    (i) The name and address of the new insurance provider;

    (ii) A copy of the new policy or group certificate containing the 

basic terms of the insurance, including the rate to be charged; and

    (iii) A statement that the cardholder may discontinue the insurance.

    (3) Substantial decrease in coverage. For purposes of this 

paragraph, a substantial decrease in coverage is a decrease in a 

significant term of coverage that might reasonably be expected to affect 

the cardholder's decision to continue the insurance. Significant terms 

of coverage include, for example, the following:

    (i) Type of coverage provided;

    (ii) Age at which coverage terminates or becomes more restrictive;

    (iii) Maximum insurable loan balance, maximum periodic benefit 

payment, maximum number of payments, or other term affecting the dollar 

amount of coverage or benefits provided;



[[Page 288]]



    (iv) Eligibility requirements and number and identity of persons 

covered;

    (v) Definition of a key term of coverage such as disability;

    (vi) Exclusions from or limitations on coverage; and

    (vii) Waiting periods and whether coverage is retroactive.

    (4) Combined notification. The notices required by paragraph (f) (1) 

and (2) of this section may be combined provided the timing requirement 

of paragraph (f)(1) of this section is met. The notices may be provided 

on or with a periodic statement.



[Reg. Z, 46 FR 20892, Apr. 7, 1981; 46 FR 29246, June 1, 1981, as 

amended at 54 FR 13867, Apr. 6, 1989; 54 FR 24688, June 9, 1989; 54 FR 

32954, Aug. 11, 1989; 55 FR 38312, Sept. 18, 1990; 55 FR 42148, Oct. 17, 

1990]