[Code of Federal Regulations]

[Title 12, Volume 6]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR707.4]



[Page 436-438]

 

                       TITLE 12--BANKS AND BANKING

 

            CHAPTER VII--NATIONAL CREDIT UNION ADMINISTRATION

 

PART 707_TRUTH IN SAVINGS--Table of Contents

 

Sec. 707.4  Account disclosures.



    (a) Delivery of account disclosures--(1) Account opening--(i) 

General. A credit union must provide account disclosures



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to a member or potential member before an account is opened or a service 

is provided, whichever is earlier. A credit union is deemed to have 

provided a service when a fee required to be disclosed is assessed. 

Except as provided in paragraph (a)(1)(ii) of this section, if the 

member is not present at the credit union when the account is opened or 

the service is provided and has not already received the disclosures, 

the credit union must mail or deliver the disclosures no later than 10 

business days after the account is opened or the service is provided, 

whichever is earlier.

    (ii) Electronic communication. If a member or potential member who 

is not present at the credit union uses electronic communication (as 

defined in Sec. 707.10) to open an account or request a service, the 

disclosures required under paragraph (a)(1) of this section must be 

provided before an account is opened or a service is provided.

    (2) Requests. (i) A credit union must provide account disclosures to 

a member or potential member upon request. If a member who is not 

present at the credit union makes a request, the credit union must mail 

or deliver the disclosures within a reasonable time after it receives 

the request and may provide the disclosures in paper form, or 

electronically if the member provides an electronic mail address.

    (ii) In providing disclosures upon request, the credit union may:

    (A) Specify rates as follows:

    (1) For dividend-bearing accounts other than term share accounts, 

specify a dividend rate and annual percentage yield as of the last 

dividend declaration date. In the event that disclosures of a dividend 

rate and annual percentage yield as of the last dividend declaration 

date might be inaccurate because of known or contemplated dividend rate 

changes, the credit union may disclose the prospective dividend rate and 

prospective annual percentage yield. Such prospective dividend rate and 

prospective annual percentage yield may be disclosed either in lieu of, 

or in addition to, the dividend rate and annual percentage yield as of 

the last dividend declaration date.

    (2) For interest bearing accounts and for dividend-bearing term 

share accounts, specify an interest rate and annual percentage yield 

that were offered within the most recent seven calendar days; state that 

the rate and yield are accurate as of an identified date; and provide a 

telephone number members may call to obtain current rate information; 

and

    (B) State the maturity of a term share account as either a term or a 

date.

    (b) Content of account disclosures. Account disclosures shall 

include the following, as applicable:

    (1) Rate information--(i) Annual percentage yield and dividend rate. 

(A) For interest-bearing accounts and for dividend-bearing term share 

accounts, the ``annual percentage yield'' and the ``interest rate'' 

(``dividend rate''), using those terms, and for fixed-rate accounts the 

period of time the interest (dividend) rate will be in effect.

    (B) For dividend-bearing accounts other than term share accounts, a 

credit union shall specify a dividend rate and annual percentage yield 

(using those terms) as of the last dividend declaration date. In the 

event that disclosures of a dividend rate and annual percentage yield as 

of the last dividend declaration date might be inaccurate because of 

known or contemplated dividend rate changes, the credit union may 

disclose the prospective dividend rate and prospective annual percentage 

yield. Such prospective dividend rate and prospective annual percentage 

yield may be disclosed either in lieu of, or in addition to, the 

dividend rate and annual percentage yield as of the last dividend 

declaration date.

    (ii) Variable rates. For variable-rate accounts:

    (A) The fact that the dividend rate and annual percentage yield may 

change;

    (B) How the dividend rate is determined;

    (C) The frequency with which the dividend rate may change; and

    (D) Any limitation on the amount the dividend rate may change.

    (2) Compounding and crediting--(i) Frequency. The frequency with 

which dividends are compounded and credited,



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and the dividend period for dividend-bearing accounts.

    (ii) Effect of closing an account. If members will forfeit dividends 

if they close an account before accrued dividends are credited, a 

statement that the dividends will not be paid in such cases.

    (3) Balance information--(i) Minimum balance requirements. Any 

minimum balance required to:

    (A) Open the account;

    (B) Avoid the imposition of a fee; or

    (C) Obtain the annual percentage yield disclosed.



Except for the balance to open the account, the disclosure shall state 

how the balance is determined for these purposes.

    (ii) Balance computation method. An explanation of the balance 

computation method specified in Sec. 707.7, used to calculate dividends 

on the account.

    (iii) When dividends begin to accrue. A statement of when dividends 

begin to accrue on noncash deposits.

    (4) Fees. The amount of any fee that may be imposed in connection 

with the account (or an explanation of how the fee will be determined) 

and the conditions under which the fee may be imposed.

    (5) Transaction limitations. Any limitations on the number or dollar 

amount of withdrawals or deposits.

    (6) Features of term share accounts. For term share accounts:

    (i) Time requirements. The maturity date.

    (ii) Early withdrawal penalties. A statement that a penalty will be 

imposed for early withdrawal, how it is calculated, and the conditions 

for its assessment.

    (iii) Withdrawal of dividends prior to maturity. If compounding 

occurs and dividends may be withdrawn prior to maturity, a statement 

that the annual percentage yield assumes dividends remain in the account 

until maturity and that a withdrawal will reduce earnings. For accounts 

with a stated maturity greater than 1 year that do not compound 

dividends on an annual or more frequent basis, that require dividend 

payouts at least annually, and that disclose an APY determined in 

accordance with section E of appendix A of this part, a statement that 

dividends cannot remain on account and that payout of dividends is 

mandatory.

    (iv) Renewal policies. A statement of whether or not the account 

will renew automatically at maturity. If it will, a statement of whether 

or not a grace period will be provided and, if so, the length of that 

period must be stated. If the account will not renew automatically, a 

statement of whether dividends will be paid after maturity if the member 

does not renew the account must be stated.

    (7) Bonuses. The amount or type of any bonus, when the bonus will be 

provided, and any minimum balance and time requirements to obtain the 

bonus.

    (8) Nature of dividends. For accounts earning dividends, other than 

term share accounts, a statement that dividends are paid from current 

income and available earnings, after required transfers to reserves at 

the end of a dividend period.

    (c) Notice to existing account holders--(1) Notice of availability 

of disclosures. Credit unions shall provide a notice to members who 

receive periodic statements and who hold existing accounts of the type 

offered by the credit union on January 1, 1995. The notice shall be 

included on or with the first periodic statement sent after January 1, 

1995 (or on or with the first periodic statement for a statement cycle 

beginning on or after that date). The notice shall state that the 

members may request account disclosures containing terms, fees, and rate 

information for the account. In responding to such a request, credit 

unions shall provide disclosures in accordance with paragraph (a)(2) of 

this section.

    (2) Alternative to notice. As an alternative to the notice described 

in paragraph (c)(1) of this section, credit unions may provide account 

disclosures to members. The disclosures may be provided either with a 

periodic statement or separately, but must be sent no later than when 

the periodic statement described in paragraph (c)(1) of this section is 

sent.



(Approved by the Office of Management and Budget under control number 

3133-0134)



[58 FR 50445, Sept. 27, 1993, as amended at 61 FR 114, Jan. 3, 1996; 63 

FR 71574, Dec. 29, 1998; 66 FR 33163, June 21, 2001]



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