Employee Preferential Rates – October 1st

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    The October 1st changes to Reg. Z impacting open-end (not home secured) lines of credit and credit cards are causing some confusion. In 226.5b(iv)(C) Employee preferential rates it states, “If a card issuer discloses in the table a preferential annual percentage rate for which only employees of the card issuer, employees of a third party, or other individuals with similar affiliations with the card issuer or third party, such as exec. officers, directors, or principal shareholders are eligible, the card issuer must briefly disclose directly beneath the table the circumstances under which such preferential rate may be revoked, and the rate that will apply after such preferential rate is revoked”.

    My question is the regulation states, “If a card issuer…” We do not disclose that employees receive preferential apr’s in the application disclosure for credit cards even though they do. Is this one of those regulatory items that although it says “If” we “must” disclose???

    Hope this makes sense!



    I think I follow you and I think you are right in thinking that it does mean “must”.

    You might want to look at having a separate application for employees to use.


    You both got it right. If you have a preferential rate, you must disclose it, and you must also the circumstances under which the preferential rate may be revoked.


    Thank you both for your help!

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