[TheBank]

We offer rewards checking and I have a question about disclosing minimum balances in the new account disclosure, specifically, the annual percentage rate required to obtain the APY from section 1030.4(b)(3)(3). A higher interest rate is paid on this account if qualifications are met. When qualifications are met the first $15,001.00 earns an interest rate of 4.41% with an APY of 4.50% for the first tier, and for the second tier balances greater than $15,001.00 earn .05% interest rate on the portion in excess of $15,001.00 plus the first $15,001 is paid 4.41%, for an APY of 4.50% – 05% for the second tier. When qualifications are not met the interest rate and APY are .01% for all balances. With this rate structure, is there a minimum balance to obtain the APY that must be disclosed? If there is, does stating the rate and corresponding APY with the daily balance range comply?

[Kimberly Boatwright, CAMS, CRCM]

According to the Regulation:

Tiered-rate accounts. Each interest rate, along with the corresponding annual percentage yield for each specified balance level (or range of annual percentage yields, if appropriate), must be disclosed for tiered-rate accounts. (See appendix A, Part I, Paragraph D.)

Examples of model forms for tiered accounts can be found here:https://www.consumerfinance.gov/rules-policy/regulations/1030/b/#43f4618ba52b0abdb36d110affd8f53a20adb8b5c739e8860093dc71

But reviewing the sample form it does appear you would be required to provided the minimum balance for each tier.

(iv) Tiered-Rate Accounts
Tiering Method A
• 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 __%.

• If your [daily balance/average daily balance] is more than $__, but less than $__, the interest rate paid on the entire balance in your account will be __% with an annual percentage yield of __%.

• If your [daily balance/average daily balance] is $__ or less, the interest rate paid on the entire balance will be __% with an annual percentage yield of __%.
Tiering Method B
• An interest rate of __% will be paid only for that portion of your [daily balance/average daily balance] that is greater than $__. The annual percentage yield for this tier will range from __% to __%, depending on the balance in the account.

• An interest rate of __% will be paid only for that portion of your [daily balance/average daily balance] that is greater than $__. The annual percentage yield for this tier will range from __% to __%, depending on the balance in the account.

• If your [daily balance/average daily balance] is $__ or less, the interest rate paid on the entire balance will be __% with an annual percentage yield of __%.

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