Truth in Savings (Ch. 2)

Question 1

What types of accounts are covered by NCUA’s Truth in Savings rule?

Answer 1

Includes an account held by a member–who hold accounts primarily for personal, family or household purposes (e.g., share, share draft, checking and term share accounts, UTMA, POD).

Question 2

Credit unions can call accounts by certain names. What are the permissible names? What are the prohibited names?

Answer 2

Allowed synonyms:

• Checking Account may be used to describe a share draft account.
• Money Market Account may be used to describe money market share accounts.
• Savings Account may be used to describe regular share and share accounts.
• Share Certificate, Certificate Account or Certificate may be used to describe term share accounts.

Not permitted:

• Deposit Account
• Interest
• CD

Question 3

What is an advertisement? What types of advertisements are exempt from some of the advertising rules?

Answer 3

A commercial message that appears in any medium and that promotes directly or indirectly the availability of, or a deposit in, a share account. The following are exempt:
› Broadcast or electronic media, such as television or radio (does not extend to Internet and e-mail advertisements)
› Outdoor media, such as billboards
› Telephone response machines
› Indoor signs displayed on computer screens, banners, preprinted posters and chalk or peg boards

Question 4

What terms in an advertisement would trigger additional disclosures? What are the additional disclosures that must be included in the advertisement?

Answer 4

When an advertisement includes an annual percentage yield, this may “trigger” certain additional disclosures, as appropriate.

• Variable Rates
• Period of time during which the annual percentage yield will be offered or accurate as of a specified date
• Minimum balance
• Minimum opening deposit
• Effect of fees
• Features of share certificate accounts (term, early withdrawal penalties, required dividend payments)

Question 5

Does Truth in Savings require a periodic statement? If not, what regulation might?

Answer 5

Truth in Savings does not require a periodic statement, but Reg E may.

Question 6

Which fees must be disclosed? Are some fees outside of the regulation’s control?

Answer 6

◦ Maintenance (monthly service)
◦ Opening/Closing
◦ Dormancy/inactivity
◦ ATM or other withdrawal or deposit fees
◦ NSF
◦ Stop payment

Question 7

What triggers a change in terms notification? If you must send one, what is the timing requirement? What are some of the ways a credit union may provide this notice?

Answer 7

A credit union must give advance notice of any change in a term that is required to be disclosed at account opening if the change may REDUCE ANNUAL PERCENTAGE YIELD or ADVERSELY AFFECT CONSUMER.

• The notice must include the effective date of the change
• Must be mailed or delivered at least 30 calendar days before the changes take effect

Question 8

How must overdraft protection fees be disclosed on periodic statements? Are any fees exempt from this requirement? If so, which fees?

Answer 8

“Total Overdraft Fees” for the STATEMENT PERIOD & YTD

› The total dollar amount for all fees imposed on the account for paying checks or other items when there are insufficient funds and the account becomes OVERDRAWN
› The total dollar amount for all fees imposed on the account for returning items UNPAID

The overdraft fee disclosure requirements do not apply to fees for transferring funds from another account.

Question 9

What terms must be disclosed in the account opening disclosures?

Answer 9

• Rate information
• The frequency with which dividends are compounded and credited and the dividend period
• Minimum balance requirements, and how the balance is determined to avoid fees or to obtain the APY. In addition, this section will provide an explanation of the balance computation method.
• Fees
• Transaction limitations
• Features of term share accounts
• Bonuses

Question 10

Are overdraft programs subject to enhanced advertising requirements? If so, what are the requirements?

Answer 10

Any advertisement promoting the payment of overdrafts must disclose all of the following:
› The fee(s) for the payment of each overdraft;
› The categories of transactions a fee may be imposed for paying an overdraft;
› The time period to repay or cover any overdraft;
› The circumstances credit union will not pay an overdraft.

Question 11

Under which circumstances must a credit union provide account disclosures? Consider both initial and subsequent disclosures.

Answer 11

• Before an account is opened or service provided
• When we charge first fee required to be disclosed
• If consumer not present, mail/provide with 10 business days
• If written information about accounts is requested
• Oral request (specifically written information about an account; not in response to an inquiry about rates and yields)
• Change in terms negatively impacting the member
• Term share accounts that automatically renew and have a maturity longer than one month
• Term share accounts that do not renew automatically and have a maturity of longer than one year

Question 12

When can credit unions advertise that an account is “free”?

Answer 12

A credit union’s advertisement may not refer to or describe an account as “free” or “no cost” (or contain a similar term such as “fees waived”) if a maintenance or activity fee may be imposed on the account.