[AuddyD]

Promotional or discounted rates. I read that Reg Z says that a promotional period need not be disclosed on the periodic statement except in periods in which the offered rate is actually applied. When the rate is applied, is there any guidance or standards on “how” the promotional rate should be disclosed on the statements? My thought is that when a promotional rate is used, it should be labeled as such on the periodic (e.g., “Promotional Rate” or “Introductory Rate”). The duration of the promotional period and the rate that will apply afterward should also explained. Is this correct?

Topic

[Kimberly Boatwright, CAMS, CRCM]

Under Regulation Z, promotional rates must be disclosed clearly and conspicuously on periodic statements, including the promotional rate, the period it applies, and the annual percentage rate (APR) that will apply after the promotional rate expires. The disclosure must be in a prominent location, closely proximate to the listing of the promotional rate.

Here’s a little breakdown:
1. Promotional Rate and Period:
The promotional rate itself must be clearly stated.
The period during which the promotional rate will be in effect must also be disclosed.
2. Post-Promotional Rate:
The type of rate (e.g., purchase or cash advance rate) that will apply after the promotional rate expires must be disclosed.
The APR that will apply after the promotional rate expires must be clearly stated.
3. Prominence and Clarity:
The disclosures must be in a clear and conspicuous manner, meaning they should be easy to read and understand.
The disclosures should be placed in a prominent location, such as on the same page as the promotional rate listing.
They should be closely proximate to the promotional rate, meaning they should be immediately next to or directly above or below the promotional rate.
4. Annual Percentage Rate (APR):
Even though the promotional rate itself is not an APR, the APR that will apply after the promotional period must be disclosed clearly.
The APR must be stated as an “annual percentage rate”.
5. Other Considerations:
If there is a date by which the consumer must use the promotional rate, that date must be disclosed.
If checks are part of the program, will the creditor will honor checks used after the date but will apply a different APR, that fact must also be disclosed.

NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.

THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE

[Author]

Replies