FR2835_FR2835a_20180524_omb

Supporting Statement for the
Quarterly Report of Interest Rates on Selected Direct Consumer Installment Loans
(FR 2835; OMB 7100-0085) and
Quarterly Report of Credit Card Plans (FR 2835a; OMB No. 7100-0085)
Summary
The Board of Governors of the Federal Reserve System (Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend for three years,
without revision, two consumer credit reports:
 Quarterly Report of Interest Rates on Selected Direct Consumer Installment Loans
(FR 2835; OMB No. 7100-0085), which collects interest rates on loans for new vehicles
and loans for other consumer goods and personal expenses from a sample of
commercial banks and
 Quarterly Report of Credit Card Plans (FR 2835a; OMB No. 7100-0085), which
collects interest rates, finance charges, and loan balances for credit card accounts from
a sample of commercial banks.
The data from these reports help the Federal Reserve analyze current household financial
conditions and the implications of these conditions for household spending and, as such, these
data provide valuable input to the monetary policymaking process. The data are also used to
create aggregate statistics on consumer loan terms that are published in the Federal Reserve’s
monthly statistical releases G.19, Consumer Credit, and G.20, Finance Companies; and in the
Federal Reserve Bulletin. Some of the aggregates are used by the Federal Reserve in the
calculation of the aggregate household debt service and financial obligations ratios for the Federal
Reserve’s quarterly Financial Obligations statistical release and by the Bureau of Economic
Analysis to calculate interest paid by households as part of the National Income and Product
Accounts. The total annual reporting burden for the two consumer credit reports is estimated to
be 274 hours.
Background and Justification
The Federal Reserve has been the primary producer of aggregate statistics related to U.S.
consumer credit since 1942. This role stems from the Federal Reserve’s need to make wellinformed monetary policy decisions and its public policy responsibilities related to consumer
credit. Since the 1940s, the Federal Reserve has maintained programs for the direct collection of
consumer credit data from commercial banks and finance companies. It obtains its information
on credit provided by other types of financial institutions mainly through secondary sources.1
The Federal Reserve has revised the consumer credit data collection program over the
years to lessen reporting burden, to eliminate items of low quality, and to focus on items of
highest priority for economic analysis. An exhaustive review of the program in 1982 resulted in
major revisions as of January 1983. Data on gross credit flows were eliminated for all major
1

Prior to 1963, the Federal Reserve also operated an extensive data collection and publication program covering
department store credit; that responsibility was subsequently transferred to the Bureau of the Census.

lending groups except finance companies, the number of series on interest rates and non-rate
loan terms was reduced sharply, and the size of the bank interest rate panel was cut.2 Overall,
respondent burden was reduced by almost 50 percent. In addition, three of four consumer credit
statistical releases were eliminated.
In 1994, the Federal Reserve removed a data item on credit card interest rates from the
FR 2835 and introduced the FR 2835a to collect more useful measures of such rates. In
introducing the FR 2835a, the Federal Reserve was able to ask for more detailed information
from large issuers of credit cards without burdening the majority of the FR 2835 respondents.
The Federal Reserve’s long-standing interest in consumer credit issues arises from a need
to evaluate macroeconomic conditions and the probable consequences of monetary policy
actions. The amount that consumers borrow and the terms at which they are able to borrow are
major determinants of the general financial conditions of households. These conditions, in turn,
play a major role in supporting consumer spending, the largest component of gross domestic
product (more than two-thirds of the total). Moreover, some of the more volatile components of
consumer spending directly depend on the terms at which households can obtain consumer loans.
In 2006, the Federal Reserve added a data item to the FR 2835 to collect the most
common interest rate on 60-month loans for new vehicles. This change was motivated by the
growing popularity of the 60-month loan term. In 2015, the FR 2835 added an item to collect the
most common rate on 72-month loans for new automobile loans.
Description of Information Collection
The two consumer credit reports gather data from commercial banks and lenders
affiliated with the major automobile manufacturers on loan amounts, loan terms, and collection
experience.
Quarterly Report of Interest Rates on Selected Direct Consumer Installment
Loans (FR 2835)
The FR 2835 collects information from a sample of commercial banks on interest rates
charged on loans for new vehicles and loans for other consumer goods and personal expenses.
Interest rates on consumer loans made by commercial banks continue to be analytically
significant. Auto and personal loans are major components of bank consumer lending, and
changes in the terms of these loans represent an important input to analyses of the household
sector prepared for the Federal Reserve. The data are used for internal analysis of household
financial conditions.
The FR 2835 respondents are asked to provide “the most common rate,” meaning the
rate at which the largest dollar volume of loans of a particular type was made during the
reporting week. For adjustable-rate loans, the initial rate is reported.
2

In 1988, gross flow data were eliminated from the Domestic Finance Company Report of Consolidated Assets and
Liabilities (FR 2248; OMB No. 7100-0005).

2

The reporting panel for the FR 2835 consists of commercial banks. There are currently
116 commercial banks on the panel.3 Although some banks have merged or otherwise dropped
out of this voluntary survey, the Federal Reserve has attempted to maintain the panel as close as
possible to the authorized size of 150. The FR 2835 panel is drawn from a sample of 150 member
banks (most large banks and a random sample of smaller banks).
The data are collected quarterly, in February, May, August, and November, and
correspond to the calendar week beginning on the first Monday of the survey month. Continued
collection of these data, at least quarterly, is necessary to prepare timely analyses of current
macroeconomic conditions and the effect of monetary policy for the Federal Reserve.
Quarterly Report of Credit Card Plans (FR 2835a)
The FR 2835a collects information on two measures of credit card interest rates from a
sample of commercial banks with $1 billion or more in credit card receivables and a
representative group of smaller issuers. This panel design is used so that the data will be
representative of interest rates paid by consumers on bank credit cards. The outstanding
balances of the respondents represent about 60 percent of all owned and managed credit card
receivables at commercial banks. The Federal Reserve uses the data to analyze the credit card
market and draw implications for the household sector.
The FR 2835a collects information on two measures of average credit card interest rates
from card-issuing commercial banks. One measure reflects the interest rate offered to credit
cardholders, and the other reflects finance charges paid by cardholders with balances.
(1) Average nominal finance rate. For the measure termed the “average nominal
finance rate, all accounts,” respondents are asked to report the simple average of interest rates
across all of the issuer’s card accounts.4 Equivalently, respondents may provide the weighted
average of interest rates across types of accounts that carry different rates, with the weights
equaling the percentage of accounts of each type. Respondents also are asked to provide the
total number of accounts, which the Federal Reserve uses to calculate the weighted average of
the nominal finance rate across banks.
This measure represents the rate at which banks are offering to make credit available to
cardholders. It abstracts from what cardholders actually pay on average. In particular, many
cardholders are “convenience users” who generally avoid finance charges by paying balances
in full within an interest-free grace period. For a variety of reasons, interest rates on the
accounts of convenience users may tend to differ from rates on the accounts cardholders who

3

As of November 2017.
In both cases, respondents are asked to report the rate applicable to purchases, as opposed to cash advances (which
often are associated with a different rate).
4

3

revolve balances and incur finance charges.5 Although these convenience users may rarely pay
interest on credit card balances, the average nominal finance rate reflects the interest rate at
which they could borrow (in addition to the rate paid by cardholders revolving balances).
(2) Average computed finance rate. For the measure termed the “average computed
finance rate,” respondents report the total finance charges billed during the survey month and
the total balances on which finance charges are computed. The Federal Reserve calculates the
average computed finance rate by dividing reported finance charges by the balances to which
they apply (multiplying the result by 12 to obtain an annualized rate). The Federal Reserve
then computes a volume-weighted average finance rate across banks.
The average computed finance rate reveals the interest rates actually paid by those
consumers who use their credit cards to obtain credit (beyond any initial grace period), as distinct
from the rates offered to all cardholders.6
Both measures of credit card interest rates are necessary, given the range of Board
activities that require data on credit card interest rates. For example, Board members have been
asked in the past to testify before Congress on proposed federal legislation to set ceilings on
credit card rates. The average nominal finance rate is more relevant to these inquiries. On the
other hand, the average computed finance rate is usually more relevant to the macro-economic
issues addressed in monetary policy deliberations. For example, in analyzing consumer spending
behavior, the Federal Reserve needs accurate data on rates faced by those who are actually in
debt and thus most vulnerable to income disruptions.
Respondents also are asked to provide initial total ending balances for all accounts and for
accounts with finance charges. The difference between these amounts represents a measure of
convenience credit-balances that are incurred during the billing cycle but are paid off in full
within the grace period. The share of convenience credit in total debt has varied over time in a
way that potentially distorts traditional measures of household financial vulnerability. For
example, the Federal Reserve has done research showing that some of the uptrend in the
aggregate financial obligations ratio has stemmed from greater convenience use of credit; this
complicates the interpretation of the evolution of the financial obligations ratio since convenience
balances are not necessarily associated with greater household financial strain in the way that
longer-term debt might be.

5

The magnitude and even the sign of differences in interest rates across cardholders of differing payment habits are a
priori unclear. Convenience users, since they ordinarily do not incur finance changes, should be fairly insensitive to
rates and thus seem as likely to choose a high-rate card as a low-rate card. However, insofar as convenience users
are low-risk customers, card issuers may offer them lower rates (perhaps hoping that a low enough rate may stimulate
some revolving of balances). Cardholders who revolve balances would be likely to seek low-rate cards. But insofar
as they are higher-risk customers, card issuers may not offer them lower rates.
6
It might appear that data from the Consolidated Reports of Condition and Income (Call Report) (FFIEC 031,
FFIEC 041, and FFIEC 051; OMB No. 7100-0036) could be used to calculate a similar finance rate, as it collects
outstanding receivables and interest income for revolving credit. However, the report does not distinguish the
balances of convenience users from those of cardholders revolving balances; only the latter should be used in deriving
an implicit interest rate from finance charges. In addition, the Call Report provides data corresponding to a mixture
of revolving credit types rather than data exclusively for credit cards.

4

Based on previous filings, there are currently 36 commercial banks on the panel.7
Although the current respondents represent the largest issuers of bank credit cards, the Federal
Reserve will continue its efforts to recruit additional respondents to bring the panel up to its
authorized size (50 commercial banks) so that the data will better represent the entire industry.
The data are collected quarterly, in February, May, August, and November. As with the
FR 2835, the quarterly frequency of the FR 2835a is adequate to track movements in credit card
finance rates, but reporting on a less frequent schedule would not be sufficient for cyclical
analysis.
Given the financial crisis and the pivotal roles played by the consumer credit industry, it
is increasingly likely that Board members and Congress will request more information about the
availability of general revolving credit, credit usage, and pricing practice. To meet potential
requests, it will be critical to monitor credit card industry dynamics using a sample of
commercial banks that is as representative as possible – consisting of both large banks that
operate nationally and smaller regional and community banks.
Time Schedule for Information Collection and Publication
The FR 2835 data are collected quarterly, in February, May, August and November, and
correspond to the calendar week beginning on the first Monday of the survey month, with the asof date being the Saturday of that week. The FR 2835a data are submitted quarterly for
February, May, August, and November. The FR 2835 and FR 2835a reports are submitted
electronically via the Reporting Central application or by paper to the appropriate Reserve
Banks.
The data from the FR 2835 and FR 2835a are used to create aggregates that are published
in the Federal Reserve’s monthly G.19 statistical release.8 The G.19 is released on or about the
fifth business day of the second month following the reference month. The release contains
aggregate data on consumer credit outstanding and lending terms. Additional information about
finance company lending terms is included in the Federal Reserve’s monthly G.20 statistical
release. Loan term data are also used by the Federal Reserve in the calculation of the aggregate
household debt service and financial obligations ratio for the Federal Reserve’s quarterly
Financial Obligations release, and they are used by the Bureau of Economic Analysis to calculate
interest paid by households as part of the National Income and Product Accounts.
Legal Status
The FR 2835 and FR 2835a is authorized by sections 2A and 11 of the Federal Reserve Act
(FRA). Section 2A of the FRA (12 U.S.C. 225a) requires that the Board and the Federal Open
Market Committee (FOMC) maintain long-run growth of the monetary and credit aggregates
commensurate with the economy’s long run potential to increase production, so as to promote
effectively the goals of maximum employment, stable prices, and moderate long-term interest
rates. Section 11 of the FRA (12 U.S.C. 248(a)) authorizes the Board to require reports from each
7

As of November 2017.

5

member bank as it may deem necessary and authorizes the Board to prescribe reports of liabilities
and assets from insured depository institutions to enable the Board to discharge its responsibility to
monitor and control monetary and credit aggregates. The information collected on the FR 2835
and FR 2835a assist the Board and the FOMC with fulfilling these obligations. Both the FR 2835
and FR 2835a are voluntary.
With respect to the FR 2835, only the narrative information to explain large fluctuations in
reported data is considered confidential. With respect to the FR 2835a, the individual respondent
data is considered confidential. Such treatment is appropriate because the data is not publicly
available and the public release of this data is likely to impair the Board’s ability to collect
necessary information in the future and cause substantial harm to the competitive position of the
respondent. Thus, this information may be kept confidential under exemption (b)(4) of the
Freedom of Information Act, which exempts from disclosure “trade secrets and commercial or
financial information obtained from a person and privileged or confidential” (5 U.S.C. 552(b)(4)).
Consultation Outside the Agency
On February 21, 2018, the Board published an initial notice in the Federal Register
(83 FR 7475) requesting public comment for 60 days on the extension, without revision, of the
FR 2835 and FR 2835a. The comment period for this notice expired on April 23, 2018. The
Board did not receive any comments. On May 15, 2018, the Board published a final notice in
the Federal Register (83 FR 22487) and the FR 2835 and FR 2835a will be extended as
proposed.
Estimate of Respondent Burden
As shown in the table below, the total annual reporting burden for the FR 2835 and
FR 2835a is estimated to be 274 hours. These reporting requirements represent less than 1
percent of the total Federal Reserve System paperwork burden.
Number of
Respondents8
FR 2835
FR 2835a

150
50

Annual
frequency
4
4

Total

8

Estimated
average hours
per response
0.29
0.50

Estimated
annual burden
hours
174
100
274

Of these respondents, 45 for the FR 2835 and 1 for the FR 2835a are considered small entities as defined by the
Small Business Administration (i.e., entities with less than $550 million in total assets)
www.sba.gov/document/support--table-size-standards.

6

The total cost to the public is estimated to be $15,358 for the FR 2835 and FR 2835a.9
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimates of Costs to the Federal Reserve System
The current cost to the Federal Reserve System for collecting and processing the FR 2835
is estimated to be $36,200 per year. The current cost for collecting and processing the FR 2835a
is estimated to be $28,400 per year.

9

Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $18, 45% Financial Managers at
$69, 15% Lawyers at $68, and 10% Chief Executives at $94). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2017, published March 30, 2018, www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

7