Deposit Account Regulations - 1 - Truth In Savings Flashcards
When opening a joint share account, should the account disclosures be given to each joint member, or is it sufficient to give the disclosures to one of the members?
The account disclosures can be given to any one of the accountholders. (Page 1-8)
Name the five different points in the life cycle of a deposit account where TIS imposes special disclosure requirements.
Preaccount opening, account opening, periodic statements, changes in account terms and account maturity, and advertising. (Page 1-2)
The initial account disclosures must include eight categories of information. List four of those categories.
Initial account disclosures should include:
(1) APY and dividend rate
(2) compounding and crediting policies
(3) balance information
(4) fees
(5) transaction limitations
(6) nature of dividends
(7) features of term share accounts
8) bonuses. (Pages 1-10 to 1-13)
Define the term “dividends.”
Dividends — declared or prospective earnings on a member’s shares in a credit union to be paid to a member or a member’s account excluding bonuses, extraordinary dividends, or similar incentives. (Page 1-4)
What TISA disclosure is required in all oral rate disclosures, account disclosures, and advertisements for deposit accounts?
The “annual percentage yield.” (Page 1-5)
TIS defines the exact form the dividend rate must be in for all disclosures and advertisements. What is that form?
It must be rounded to the nearest basis point (.01) and disclosed to two decimal places (4.55%). (Page 1-5)
Explain the difference between the Annual Percentage Yield (APY) and the Annual Percentage Yield Earned (APYE).
Annual Percentage Yield (APY) — the percentage rate reflecting the total amount of dividends paid on an account based on the dividend rate and the frequency of compounding for a 365-day period for share and share draft accounts or for the term of the account for term share accounts. The APY assumes the principal amount remains in the account for 365 days or the term of the account.
(Page 1-5)
List the two methods of dividend calculation allowed by TIS and briefly describe how each one works.
Daily balance method — a daily periodic rate is applied to the exact daily balance in the account for each day. (Page 1-6)
Average daily balance method — the balance for each day is added together, this figure is divided by the number of days in the period, and the periodic rate is applied to this figure. (Page 1-6)
The dividend nonpayment rules outline four instances when credit unions are not required to pay dividends. List three of them.
During the grace period of a rollover term share account, after maturity for a nonrollover term share account, funds remaining in a closed account, and the time period during which checks are returned unpaid. (Pages 1-7)
Does NCUA mandate a particular frequency for compounding and crediting dividends?
No, they only require that the frequency be stated in the account disclosures. (Page 1-7)
If your credit union provides TIS account disclosures electronically, the member must first provide their affirmative consent to receive electronic disclosures.
Before the credit union accepts that consent, the member must receive a written disclosure containing specific information. What two pieces of information must
be included in that disclosure?
The disclosure must inform members of their rights as they relate to electronic disclosures and provide the hardware and software requirements for accessing and retaining the disclosures. (Page 1-25)
If members can open accounts online, at what point in that process must they receive the TIS account disclosures?
The member must be required to access the account disclosure before the account is opened or the services are provided, whichever is earlier. (Page 1-9)
Name the four major items TIS requires on periodic statements.
The Annual Percentage Yield Earned, the amount of dividends/interest earned, any fees imposed, and the number of days in the period. (Pages 1-14)
When is a change in terms notice required?
Affected members must be sent a change in terms notice whenever there will be a change in any terms required in the initial TISA account disclosure if that change may reduce the APY or adversely affect the member. The notice must be
mailed 30 days before the change goes into effect. (Page 1-19)
If an advertisement mentions an APY, what other disclosures must be shown clearly and conspicuously?
Variable rate accounts — the fact that the rate may change after the account is opened.
Time the APY is available — 1) for dividend-bearing accounts except term share accounts, a statement that the APY is accurate as of the last dividend declaration date or that the disclosed prospective APY is accurate or 2) for
interest-bearing accounts and dividend-bearing term share accounts, the period the APY is offered for that account or a statement that the APY is accurate as of a specified date.
Minimum balance required to obtain the advertised APY.
Minimum opening deposit if it is greater than the minimum balance necessary to obtain the advertised APY.
Effect of fees — a statement that “fees could reduce earnings if maintenance or activity fees could be imposed that would reduce earnings.
Features of term share accounts — the term of the account and a statement that a penalty will or may be imposed for early withdrawal. (Page 1-22 to 1-23)
