12 CFR Part 1026 (Subpart G)

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§ 1026.51

12 CFR Ch. X (1–1–21 Edition)

(4) Exceptions requiring re-disclosure.
(i) Notwithstanding paragraphs (c)(2)
or (c)(3) of this section, nothing in this
section prevents the creditor, at its option, from changing the rate or terms
of the loan to accommodate a specific
request by the consumer. For example,
if the consumer requests a different repayment option, the creditor may, but
need not, offer to provide the requested
repayment option and make any other
changes to the rate and terms.
(ii) If the creditor changes the rate or
terms of the loan under this paragraph
(c)(4), the creditor shall provide the
disclosures required under § 1026.47(b)
and shall provide the consumer the 30day period to accept the loan under
paragraph (c)(1) of this section. The
creditor shall not make further
changes to the rates and terms of the
loan, except as specified in paragraphs
(c)(3) and (4) of this section. Except as
permitted under § 1026.48(c)(3), unless
the consumer accepts the loan offered
by the creditor in response to the consumer’s request, the creditor may not
withdraw or change the rates or terms
of the loan for which the consumer was
approved prior to the consumer’s request for a change in loan terms.
(d) Consumer’s right to cancel. The
consumer may cancel a private education loan, without penalty, until
midnight of the third business day following the date on which the consumer
receives the disclosures required by
§ 1026.47(c). No funds may be disbursed
for a private education loan until the
three-business day period has expired.
(e) Self-certification form. For a private education loan intended to be used
for the postsecondary educational expenses of a student while the student is
attending an institution of higher education, the creditor shall obtain from
the consumer or the institution of
higher education the form developed by
the Secretary of Education under section 155 of the Higher Education Act of
1965, signed by the consumer, in written or electronic form, before consummating the private education loan.
(f) Provision of information by preferred
lenders. A creditor that has a preferred
lender arrangement with a covered
educational institution shall provide to
the covered educational institution the
information
required
under

§ 1026.47(a)(1) through (5), for each type
of private education loan that the lender plans to offer to consumers for students attending the covered educational institution for the period beginning July 1 of the current year and
ending June 30 of the following year.
The creditor shall provide the information annually by the later of the 1st
day of April, or within 30 days after entering into, or learning the creditor is
a party to, a preferred lender arrangement.

Subpart G—Special Rules Applicable to Credit Card Accounts and Open-End Credit
Offered to College Students
§ 1026.51 Ability to Pay.
(a) General rule—(1)(i) Consideration of
ability to pay. A card issuer must not
open a credit card account for a consumer under an open-end (not home-secured) consumer credit plan, or increase any credit limit applicable to
such account, unless the card issuer
considers the consumer’s ability to
make the required minimum periodic
payments under the terms of the account based on the consumer’s income
or assets and the consumer’s current
obligations.
(ii) Reasonable policies and procedures.
Card issuers must establish and maintain reasonable written policies and
procedures to consider the consumer’s
ability to make the required minimum
payments under the terms of the account based on a consumer’s income or
assets and a consumer’s current obligations. Reasonable policies and procedures include treating any income and
assets to which the consumer has a
reasonable expectation of access as the
consumer’s income or assets, or limiting consideration of the consumer’s
income or assets to the consumer’s
independent income and assets. Reasonable policies and procedures also include consideration of at least one of
the following: The ratio of debt obligations to income; the ratio of debt obligations to assets; or the income the
consumer will have after paying debt
obligations. It would be unreasonable
for a card issuer not to review any information about a consumer’s income
or assets and current obligations, or to

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Bur. of Consumer Financial Protection

§ 1026.52

issue a credit card to a consumer who
does not have any income or assets.
(2) Minimum periodic payments—(i)
Reasonable method. For purposes of
paragraph (a)(1) of this section, a card
issuer must use a reasonable method
for estimating the minimum periodic
payments the consumer would be required to pay under the terms of the
account.
(ii) Safe harbor. A card issuer complies with paragraph (a)(2)(i) of this
section if it estimates required minimum periodic payments using the following method:
(A) The card issuer assumes utilization, from the first day of the billing
cycle, of the full credit line that the
issuer is considering offering to the
consumer; and
(B) The card issuer uses a minimum
payment formula employed by the
issuer for the product the issuer is considering offering to the consumer or, in
the case of an existing account, the
minimum payment formula that currently applies to that account, provided that:
(1) If the applicable minimum payment
formula
includes
interest
charges, the card issuer estimates
those charges using an interest rate
that the issuer is considering offering
to the consumer for purchases or, in
the case of an existing account, the interest rate that currently applies to
purchases; and
(2) If the applicable minimum payment formula includes mandatory fees,
the card issuer must assume that such
fees have been charged to the account.
(b) Rules affecting young consumers—
(1) Applications from young consumers. A
card issuer may not open a credit card
account under an open-end (not homesecured) consumer credit plan for a
consumer less than 21 years old, unless
the consumer has submitted a written
application and the card issuer has:
(i) Financial information indicating
the consumer has an independent ability to make the required minimum
periodic payments on the proposed extension of credit in connection with
the account; or
(ii)(A) A signed agreement of a cosigner, guarantor, or joint applicant
who is at least 21 years old to be either
secondarily liable for any debt on the

account incurred by the consumer before the consumer has attained the age
of 21 or jointly liable with the consumer for any debt on the account; and
(B) Financial information indicating
such cosigner, guarantor, or joint applicant has the ability to make the required minimum periodic payments on
such debts, consistent with paragraph
(a) of this section.
(2) Credit line increases for young consumers. (i) If a credit card account has
been opened pursuant to paragraph
(b)(1)(i) of this section, no increase in
the credit limit may be made on such
account before the consumer attains
the age of 21 unless:
(A) At the time of the contemplated
increase, the consumer has an independent ability to make the required
minimum periodic payments on the increased limit consistent with paragraph (b)(1)(i) of this section; or
(B) A cosigner, guarantor, or joint
applicant who is at least 21 years old
agrees in writing to assume liability
for any debt incurred on the account,
consistent with paragraph (b)(1)(ii) of
this section.
(ii) If a credit card account has been
opened pursuant to paragraph (b)(1)(ii)
of this section, no increase in the credit limit may be made on such account
before the consumer attains the age of
21 unless the cosigner, guarantor, or
joint accountholder who assumed liability at account opening agrees in
writing to assume liability on the increase.
[76 FR 79772, Dec. 22, 2011, as amended at 78
FR 25837, May 3, 2013]

§ 1026.52 Limitations on fees.
(a) Limitations during first year after
account opening—(1) General rule. Except as provided in paragraph (a)(2) of
this section, the total amount of fees a
consumer is required to pay with respect to a credit card account under an
open-end (not home-secured) consumer
credit plan during the first year after
account opening must not exceed 25
percent of the credit limit in effect
when the account is opened. For purposes of this paragraph, an account is
considered open no earlier than the
date on which the account may first be
used by the consumer to engage in
transactions.

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§ 1026.52

12 CFR Ch. X (1–1–21 Edition)

(2) Fees not subject to limitations. Paragraph (a) of this section does not apply
to:
(i) Late payment fees, over-the-limit
fees, and returned-payment fees; or
(ii) Fees that the consumer is not required to pay with respect to the account.
(3) Rule of construction. Paragraph (a)
of this section does not authorize the
imposition or payment of fees or
charges otherwise prohibited by law.
(b) Limitations on penalty fees. A card
issuer must not impose a fee for violating the terms or other requirements
of a credit card account under an openend (not home-secured) consumer credit plan unless the dollar amount of the
fee is consistent with paragraphs (b)(1)
and (b)(2) of this section.
(1) General rule. Except as provided in
paragraph (b)(2) of this section, a card
issuer may impose a fee for violating
the terms or other requirements of a
credit card account under an open-end
(not home-secured) consumer credit
plan if the dollar amount of the fee is
consistent
with
either
paragraph
(b)(1)(i) or (b)(1)(ii) of this section.
(i) Fees based on costs. A card issuer
may impose a fee for violating the
terms or other requirements of an account if the card issuer has determined
that the dollar amount of the fee represents a reasonable proportion of the
total costs incurred by the card issuer
as a result of that type of violation. A
card issuer must reevaluate this determination at least once every twelve
months. If as a result of the reevaluation the card issuer determines that a
lower fee represents a reasonable proportion of the total costs incurred by
the card issuer as a result of that type
of violation, the card issuer must begin
imposing the lower fee within 45 days
after completing the reevaluation. If as
a result of the reevaluation the card
issuer determines that a higher fee represents a reasonable proportion of the
total costs incurred by the card issuer
as a result of that type of violation,
the card issuer may begin imposing the
higher fee after complying with the notice requirements in § 1026.9.
(ii) Safe harbors. A card issuer may
impose a fee for violating the terms or
other requirements of an account if the

dollar amount of the fee does not exceed, as applicable:
(A) $29
(B) $40 if the card issuer previously
imposed a fee pursuant to paragraph
(b)(1)(ii)(A) of this section for a violation of the same type that occurred
during the same billing cycle or one of
the next six billing cycles; or
(C) Three percent of the delinquent
balance on a charge card account that
requires payment of outstanding balances in full at the end of each billing
cycle if the card issuer has not received
the required payment for two or more
consecutive billing cycles.
(D) The amounts in paragraphs
(b)(1)(ii)(A) and (b)(1)(ii)(B) of this section will be adjusted annually by the
Bureau to reflect changes in the Consumer Price Index.
(2) Prohibited fees—(i) Fees that exceed
dollar amount associated with violation—
(A) Generally. A card issuer must not
impose a fee for violating the terms or
other requirements of a credit card account under an open-end (not home-secured) consumer credit plan that exceeds the dollar amount associated
with the violation.
(B) No dollar amount associated with
violation. A card issuer must not impose a fee for violating the terms or
other requirements of a credit card account under an open-end (not home-secured) consumer credit plan when there
is no dollar amount associated with the
violation. For purposes of paragraph
(b)(2)(i) of this section, there is no dollar amount associated with the following violations:
(1) Transactions that the card issuer
declines to authorize;
(2) Account inactivity; and
(3) The closure or termination of an
account.
(ii) Multiple fees based on a single event
or transaction. A card issuer must not
impose more than one fee for violating
the terms or other requirements of a
credit card account under an open-end
(not home-secured) consumer credit
plan based on a single event or transaction. A card issuer may, at its option, comply with this prohibition by

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Bur. of Consumer Financial Protection

§ 1026.55

imposing no more than one fee for violating the terms or other requirements
of an account during a billing cycle.

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[76 FR 79772, Dec. 22, 2011, as amended at 78
FR 18797, Mar. 28, 2013; 78 FR 76035, Dec. 16,
2013; 79 FR 48017, Aug. 15, 2014; 80 FR 56898,
Sept. 21, 2015; 81 FR 41421, June 27, 2016; 81 FR
84370, Nov. 22, 2016; 83 FR 43505, Aug. 27, 2018;
84 FR 37567, Aug. 1, 2019]

§ 1026.53 Allocation of payments.
(a) General rule. Except as provided in
paragraph (b) of this section, when a
consumer makes a payment in excess
of the required minimum periodic payment for a credit card account under
an open-end (not home-secured) consumer credit plan, the card issuer must
allocate the excess amount first to the
balance with the highest annual percentage rate and any remaining portion to the other balances in descending order based on the applicable annual percentage rate.
(b) Special rules—(1) Accounts with balances subject to deferred interest or similar program. When a balance on a credit
card account under an open-end (not
home-secured) consumer credit plan is
subject to a deferred interest or similar
program that provides that a consumer
will not be obligated to pay interest
that accrues on the balance if the balance is paid in full prior to the expiration of a specified period of time:
(i) Last two billing cycles. The card
issuer must allocate any amount paid
by the consumer in excess of the required minimum periodic payment consistent with paragraph (a) of this section, except that, during the two billing cycles immediately preceding expiration of the specified period, the excess amount must be allocated first to
the balance subject to the deferred interest or similar program and any remaining portion allocated to any other
balances consistent with paragraph (a)
of this section; or
(ii) Consumer request. The card issuer
may at its option allocate any amount
paid by the consumer in excess of the
required minimum periodic payment
among the balances on the account in
the manner requested by the consumer.
(2) Accounts with secured balances.
When a balance on a credit card account under an open-end (not home-secured) consumer credit plan is secured,

the card issuer may at its option allocate any amount paid by the consumer
in excess of the required minimum
periodic payment to that balance if requested by the consumer.
§ 1026.54 Limitations on the imposition
of finance charges.
(a) Limitations on imposing finance
charges as a result of the loss of a grace
period—(1) General rule. Except as provided in paragraph (b) of this section, a
card issuer must not impose finance
charges as a result of the loss of a
grace period on a credit card account
under an open-end (not home-secured)
consumer credit plan if those finance
charges are based on:
(i) Balances for days in billing cycles
that precede the most recent billing
cycle; or
(ii) Any portion of a balance subject
to a grace period that was repaid prior
to the expiration of the grace period.
(2) Definition of grace period. For purposes of paragraph (a)(1) of this section, ‘‘grace period’’ has the same
meaning as in § 1026.5(b)(2)(ii)(B)(3).
(b) Exceptions. Paragraph (a) of this
section does not apply to:
(1) Adjustments to finance charges as
a result of the resolution of a dispute
under § 1026.12 or § 1026.13; or
(2) Adjustments to finance charges as
a result of the return of a payment.
§ 1026.55 Limitations on increasing annual percentage rates, fees, and
charges.
(a) General rule. Except as provided in
paragraph (b) of this section, a card
issuer must not increase an annual percentage rate or a fee or charge required
to be disclosed under § 1026.6(b)(2)(ii),
(b)(2)(iii), or (b)(2)(xii) on a credit card
account under an open-end (not homesecured) consumer credit plan.
(b) Exceptions. A card issuer may increase an annual percentage rate or a
fee or charge required to be disclosed
under § 1026.6(b)(2)(ii), (b)(2)(iii), or
(b)(2)(xii) pursuant to an exception set
forth in this paragraph even if that increase would not be permitted under a
different exception.
(1) Temporary rate, fee, or charge exception. A card issuer may increase an
annual percentage rate or a fee or
charge required to be disclosed under

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§ 1026.55

12 CFR Ch. X (1–1–21 Edition)

§ 1026.6(b)(2)(ii), (b)(2)(iii), or (b)(2)(xii)
upon the expiration of a specified period of six months or longer, provided
that:
(i) Prior to the commencement of
that period, the card issuer disclosed in
writing to the consumer, in a clear and
conspicuous manner, the length of the
period and the annual percentage rate,
fee, or charge that would apply after
expiration of the period; and
(ii) Upon expiration of the specified
period:
(A) The card issuer must not apply
an annual percentage rate, fee, or
charge to transactions that occurred
prior to the period that exceeds the annual percentage rate, fee, or charge
that applied to those transactions prior
to the period;
(B) If the disclosures required by
paragraph (b)(1)(i) of this section are
provided pursuant to § 1026.9(c), the
card issuer must not apply an annual
percentage rate, fee, or charge to
transactions that occurred within 14
days after provision of the notice that
exceeds the annual percentage rate,
fee, or charge that applied to that category of transactions prior to provision
of the notice; and
(C) The card issuer must not apply an
annual percentage rate, fee, or charge
to transactions that occurred during
the period that exceeds the increased
annual percentage rate, fee, or charge
disclosed
pursuant
to
paragraph
(b)(1)(i) of this section.
(2) Variable rate exception. A card
issuer may increase an annual percentage rate when:
(i) The annual percentage rate varies
according to an index that is not under
the card issuer’s control and is available to the general public; and
(ii) The increase in the annual percentage rate is due to an increase in
the index.
(3) Advance notice exception. A card
issuer may increase an annual percentage rate or a fee or charge required to
be disclosed under § 1026.6(b)(2)(ii),
(b)(2)(iii), or (b)(2)(xii) after complying
with the applicable notice requirements in § 1026.9(b), (c), or (g), provided
that:
(i) If a card issuer discloses an increased annual percentage rate, fee, or
charge pursuant to § 1026.9(b), the card

issuer must not apply that rate, fee, or
charge to transactions that occurred
prior to provision of the notice;
(ii) If a card issuer discloses an increased annual percentage rate, fee, or
charge pursuant to § 1026.9(c) or (g), the
card issuer must not apply that rate,
fee, or charge to transactions that occurred prior to or within 14 days after
provision of the notice; and
(iii) This exception does not permit a
card issuer to increase an annual percentage rate or a fee or charge required
to be disclosed under § 1026.6(b)(2)(ii),
(iii), or (xii) during the first year after
the account is opened, while the account is closed, or while the card issuer
does not permit the consumer to use
the account for new transactions. For
purposes of this paragraph, an account
is considered open no earlier than the
date on which the account may first be
used by the consumer to engage in
transactions.
(4) Delinquency exception. A card
issuer may increase an annual percentage rate or a fee or charge required to
be disclosed under § 1026.6(b)(2)(ii),
(b)(2)(iii), or (b)(2)(xii) due to the card
issuer not receiving the consumer’s required minimum periodic payment
within 60 days after the due date for
that payment, provided that:
(i) The card issuer must disclose in a
clear and conspicuous manner in the
notice of the increase pursuant to
§ 1026.9(c) or (g):
(A) A statement of the reason for the
increase; and
(B) That the increased annual percentage rate, fee, or charge will cease
to apply if the card issuer receives six
consecutive required minimum periodic payments on or before the payment due date beginning with the first
payment due following the effective
date of the increase; and
(ii) If the card issuer receives six consecutive required minimum periodic
payments on or before the payment due
date beginning with the first payment
due following the effective date of the
increase, the card issuer must reduce
any annual percentage rate, fee, or
charge increased pursuant to this exception to the annual percentage rate,
fee, or charge that applied prior to the
increase with respect to transactions
that occurred prior to or within 14 days

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Bur. of Consumer Financial Protection

§ 1026.56

after provision of the § 1026.9(c) or (g)
notice.
(5) Workout and temporary hardship arrangement exception. A card issuer may
increase an annual percentage rate or a
fee or charge required to be disclosed
under § 1026.6(b)(2)(ii), (b)(2)(iii), or
(b)(2)(xii) due to the consumer’s completion of a workout or temporary
hardship arrangement or the consumer’s failure to comply with the
terms of such an arrangement, provided that:
(i) Prior to commencement of the arrangement (except as provided in
§ 1026.9(c)(2)(v)(D)), the card issuer has
provided the consumer with a clear and
conspicuous written disclosure of the
terms of the arrangement (including
any increases due to the completion or
failure of the arrangement); and
(ii) Upon the completion or failure of
the arrangement, the card issuer must
not apply to any transactions that occurred prior to commencement of the
arrangement an annual percentage
rate, fee, or charge that exceeds the annual percentage rate, fee, or charge
that applied to those transactions prior
to commencement of the arrangement.
(6) Servicemembers Civil Relief Act exception. If an annual percentage rate or
a fee or charge required to be disclosed
under § 1026.6(b)(2)(ii), (iii), or (xii) has
been decreased pursuant to 50 U.S.C.
app. 527 or a similar Federal or state
statute or regulation, a card issuer
may increase that annual percentage
rate, fee, or charge once 50 U.S.C. app.
527 or the similar statute or regulation
no longer applies, provided that the
card issuer must not apply to any
transactions that occurred prior to the
decrease an annual percentage rate,
fee, or charge that exceeds the annual
percentage rate, fee, or charge that applied to those transactions prior to the
decrease.
(c) Treatment of protected balances—(1)
Definition of protected balance. For purposes of this paragraph, ‘‘protected balance’’ means the amount owed for a
category of transactions to which an
increased annual percentage rate or an
increased fee or charge required to be
disclosed
under
§ 1026.6(b)(2)(ii),
(b)(2)(iii), or (b)(2)(xii) cannot be applied after the annual percentage rate,
fee, or charge for that category of

transactions has been increased pursuant to paragraph (b)(3) of this section.
(2) Repayment of protected balance.
The card issuer must not require repayment of the protected balance using
a method that is less beneficial to the
consumer than one of the following
methods:
(i) The method of repayment for the
account before the effective date of the
increase;
(ii) An amortization period of not
less than five years, beginning no earlier than the effective date of the increase; or
(iii) A required minimum periodic
payment that includes a percentage of
the balance that is equal to no more
than twice the percentage required before the effective date of the increase.
(d) Continuing application. This section continues to apply to a balance on
a credit card account under an openend (not home-secured) consumer credit plan after:
(1) The account is closed or acquired
by another creditor; or
(2) The balance is transferred from a
credit card account under an open-end
(not home-secured) consumer credit
plan issued by a creditor to another
credit account issued by the same creditor or its affiliate or subsidiary (unless the account to which the balance
is transferred is subject to § 1026.40).
(e) Promotional waivers or rebates of interest, fees, and other charges. If a card
issuer promotes the waiver or rebate of
finance charges due to a periodic interest rate or fees or charges required to
be disclosed under § 1026.6(b)(2)(ii), (iii),
or (xii) and applies the waiver or rebate
to a credit card account under an openend (not home-secured) consumer credit plan, any cessation of the waiver or
rebate on that account constitutes an
increase in an annual percentage rate,
fee, or charge for purposes of this section.
§ 1026.56 Requirements for over-thelimit transactions.
(a) Definition. For purposes of this
section, the term ‘‘over-the-limit
transaction’’ means any extension of
credit by a card issuer to complete a
transaction that causes a consumer’s
credit card account balance to exceed
the credit limit.

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§ 1026.56

12 CFR Ch. X (1–1–21 Edition)

(b) Opt-in requirement—(1) General. A
card issuer shall not assess a fee or
charge on a consumer’s credit card account under an open-end (not home-secured) consumer credit plan for an
over-the-limit transaction unless the
card issuer:
(i) Provides the consumer with an
oral, written or electronic notice, segregated from all other information, describing the consumer’s right to affirmatively consent, or opt in, to the
card issuer’s payment of an over-thelimit transaction;
(ii) Provides a reasonable opportunity for the consumer to affirmatively consent, or opt in, to the card
issuer’s payment of over-the-limit
transactions;
(iii) Obtains the consumer’s affirmative consent, or opt-in, to the card
issuer’s payment of such transactions;
(iv) Provides the consumer with confirmation of the consumer’s consent in
writing, or if the consumer agrees,
electronically; and
(v) Provides the consumer notice in
writing of the right to revoke that consent following the assessment of an
over-the-limit fee or charge.
(2) Completion of over-the-limit transactions without consumer consent. Notwithstanding the absence of a consumer’s affirmative consent under
paragraph (b)(1)(iii) of this section, a
card issuer may pay any over-the-limit
transaction on a consumer’s account
provided that the card issuer does not
impose any fee or charge on the account for paying that over-the-limit
transaction.
(c) Method of election. A card issuer
may permit a consumer to consent to
the card issuer’s payment of any overthe-limit transaction in writing, orally, or electronically, at the card
issuer’s option. The card issuer must
also permit the consumer to revoke his
or her consent using the same methods
available to the consumer for providing
consent.
(d) Timing and placement of notices—
(1) Initial notice—(i) General. The notice
required by paragraph (b)(1)(i) of this
section shall be provided prior to the
assessment of any over-the-limit fee or
charge on a consumer’s account.
(ii) Oral or electronic consent. If a consumer consents to the card issuer’s

payment of any over-the-limit transaction by oral or electronic means, the
card issuer must provide the notice required by paragraph (b)(1)(i) of this section immediately prior to obtaining
that consent.
(2) Confirmation of opt-in. The notice
required by paragraph (b)(1)(iv) of this
section may be provided no later than
the first periodic statement sent after
the consumer has consented to the card
issuer’s payment of over-the-limit
transactions.
(3) Notice of right of revocation. The
notice required by paragraph (b)(1)(v)
of this section shall be provided on the
front of any page of each periodic
statement that reflects the assessment
of an over-the-limit fee or charge on a
consumer’s account.
(e) Content—(1) Initial notice. The notice required by paragraph (b)(1)(i) of
this section shall include all applicable
items in this paragraph (e)(1) and may
not contain any information not specified in or otherwise permitted by this
paragraph.
(i) Fees. The dollar amount of any
fees or charges assessed by the card
issuer on a consumer’s account for an
over-the-limit transaction;
(ii) APRs. Any increased periodic
rate(s) (expressed as an annual percentage rate(s)) that may be imposed on
the account as a result of an over-thelimit transaction; and
(iii) Disclosure of opt-in right. An explanation of the consumer’s right to affirmatively consent to the card issuer’s
payment
of
over-the-limit
transactions, including the method(s) by
which the consumer may consent.
(2) Subsequent notice. The notice required by paragraph (b)(1)(v) of this
section shall describe the consumer’s
right to revoke any consent provided
under paragraph (b)(1)(iii) of this section, including the method(s) by which
the consumer may revoke.
(3) Safe harbor. Use of Model Forms
G–25(A) or G–25(B) of appendix G to
this part, or substantially similar notices, constitutes compliance with the
notice content requirements of paragraph (e) of this section.
(f) Joint relationships. If two or more
consumers are jointly liable on a credit
card account under an open-end (not
home-secured) consumer credit plan,

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Bur. of Consumer Financial Protection

§ 1026.57

the card issuer shall treat the affirmative consent of any of the joint consumers as affirmative consent for that
account. Similarly, the card issuer
shall treat a revocation of consent by
any of the joint consumers as revocation of consent for that account.
(g) Continuing right to opt in or revoke
opt-in. A consumer may affirmatively
consent to the card issuer’s payment of
over-the-limit transactions at any time
in the manner described in the notice
required by paragraph (b)(1)(i) of this
section. Similarly, the consumer may
revoke the consent at any time in the
manner described in the notice required by paragraph (b)(1)(v) of this
section.
(h) Duration of opt-in. A consumer’s
affirmative consent to the card issuer’s
payment of over-the-limit transactions
is effective until revoked by the consumer, or until the card issuer decides
for any reason to cease paying overthe-limit transactions for the consumer.
(i) Time to comply with revocation request. A card issuer must comply with
a consumer’s revocation request as
soon as reasonably practicable after
the card issuer receives it.
(j) Prohibited practices. Notwithstanding a consumer’s affirmative consent to a card issuer’s payment of overthe-limit transactions, a card issuer is
prohibited from engaging in the following practices:
(1) Fees or charges imposed per cycle—
(i) General rule. A card issuer may not
impose more than one over-the-limit
fee or charge on a consumer’s credit
card account per billing cycle, and, in
any event, only if the credit limit was
exceeded during the billing cycle. In
addition, except as provided in paragraph (j)(1)(ii) of this section, a card
issuer may not impose an over-thelimit fee or charge on the consumer’s
credit card account for more than
three billing cycles for the same overthe-limit transaction where the consumer has not reduced the account balance below the credit limit by the payment due date for either of the last two
billing cycles.
(ii) Exception. The prohibition in
paragraph (j)(1)(i) of this section on imposing an over-the-limit fee or charge
in more than three billing cycles for

the same over-the-limit transaction(s)
does not apply if another over-thelimit transaction occurs during either
of the last two billing cycles.
(2) Failure to promptly replenish. A
card issuer may not impose an overthe-limit fee or charge solely because
of the card issuer’s failure to promptly
replenish the consumer’s available
credit following the crediting of the
consumer’s payment under § 1026.10.
(3) Conditioning. A card issuer may
not condition the amount of a consumer’s credit limit on the consumer
affirmatively consenting to the card
issuer’s payment of over-the-limit
transactions if the card issuer assesses
a fee or charge for such service.
(4) Over-the-limit fees attributed to fees
or interest. A card issuer may not impose an over-the-limit fee or charge for
a billing cycle if a consumer exceeds a
credit limit solely because of fees or interest charged by the card issuer to the
consumer’s account during that billing
cycle. For purposes of this paragraph
(j)(4), the relevant fees or interest
charges are charges imposed as part of
the plan under § 1026.6(b)(3).
§ 1026.57 Reporting and marketing
rules for college student open-end
credit.
(a) Definitions—(1) College student
credit card. The term ‘‘college student
credit card’’ as used in this section
means a credit card issued under a
credit card account under an open-end
(not home-secured) consumer credit
plan to any college student.
(2) College student. The term ‘‘college
student’’ as used in this section means
a consumer who is a full-time or parttime student of an institution of higher
education.
(3) Institution of higher education. The
term ‘‘institution of higher education’’
as used in this section has the same
meaning as in sections 101 and 102 of
the Higher Education Act of 1965 (20
U.S.C. 1001 and 1002).
(4) Affiliated organization. The term
‘‘affiliated organization’’ as used in
this section means an alumni organization or foundation affiliated with or related to an institution of higher education.
(5) College credit card agreement. The
term ‘‘college credit card agreement’’

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§ 1026.58

12 CFR Ch. X (1–1–21 Edition)

as used in this section means any business, marketing or promotional agreement between a card issuer and an institution of higher education or an affiliated organization in connection
with which college student credit cards
are issued to college students currently
enrolled at that institution.
(b) Public disclosure of agreements. An
institution of higher education shall
publicly disclose any contract or other
agreement made with a card issuer or
creditor for the purpose of marketing a
credit card.
(c) Prohibited inducements. No card
issuer or creditor may offer a college
student any tangible item to induce
such student to apply for or open an
open-end consumer credit plan offered
by such card issuer or creditor, if such
offer is made:
(1) On the campus of an institution of
higher education;
(2) Near the campus of an institution
of higher education; or
(3) At an event sponsored by or related to an institution of higher education.
(d) Annual report to the Bureau—(1)
Requirement to report. Any card issuer
that was a party to one or more college
credit card agreements in effect at any
time during a calendar year must submit to the Bureau an annual report regarding those agreements in the form
and manner prescribed by the Bureau.
(2) Contents of report. The annual report to the Bureau must include the
following:
(i) Identifying information about the
card issuer and the agreements submitted, including the issuer’s name,
address, and identifying number (such
as an RSSD ID number or tax identification number);
(ii) A copy of any college credit card
agreement to which the card issuer was
a party that was in effect at any time
during the period covered by the report;
(iii) A copy of any memorandum of
understanding in effect at any time
during the period covered by the report
between the card issuer and an institution of higher education or affiliated
organization that directly or indirectly
relates to the college credit card agreement or that controls or directs any

obligations or distribution of benefits
between any such entities;
(iv) The total dollar amount of any
payments pursuant to a college credit
card agreement from the card issuer to
an institution of higher education or
affiliated organization during the period covered by the report, and the
method or formula used to determine
such amounts;
(v) The total number of credit card
accounts opened pursuant to any college credit card agreement during the
period covered by the report; and
(vi) The total number of credit card
accounts opened pursuant to any such
agreement that were open at the end of
the period covered by the report.
(3) Timing of reports. Except for the
initial report described in this paragraph (d)(3), a card issuer must submit
its annual report for each calendar
year to the Bureau by the first business
day on or after March 31 of the following calendar year.
§ 1026.58 Internet posting of credit
card agreements.
(a) Applicability. The requirements of
this section apply to any card issuer
that issues credit cards under a credit
card account under an open-end (not
home-secured) consumer credit plan.
(b) Definitions—(1) Agreement. For
purposes of this section, ‘‘agreement’’
or ‘‘credit card agreement’’ means the
written document or documents evidencing the terms of the legal obligation, or the prospective legal obligation, between a card issuer and a consumer for a credit card account under
an open-end (not home-secured) consumer credit plan. ‘‘Agreement’’ or
‘‘credit card agreement’’ also includes
the pricing information, as defined in
§ 1026.58(b)(7).
(2) Amends. For purposes of this section, an issuer ‘‘amends’’ an agreement
if it makes a substantive change (an
‘‘amendment’’) to the agreement. A
change is substantive if it alters the
rights or obligations of the card issuer
or the consumer under the agreement.
Any change in the pricing information,
as defined in § 1026.58(b)(7), is deemed to
be substantive.
(3) Business day. For purposes of this
section, ‘‘business day’’ means a day on
which the creditor’s offices are open to

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Bur. of Consumer Financial Protection

§ 1026.58

the public for carrying on substantially
all of its business functions.
(4) Card issuer. For purposes of this
section, ‘‘card issuer’’ or ‘‘issuer’’
means the entity to which a consumer
is legally obligated, or would be legally
obligated, under the terms of a credit
card agreement.
(5) Offers. For purposes of this section, an issuer ‘‘offers’’ or ‘‘offers to
the public’’ an agreement if the issuer
is soliciting or accepting applications
for accounts that would be subject to
that agreement.
(6) Open account. For purposes of this
section, an account is an ‘‘open account’’ or ‘‘open credit card account’’ if
it is a credit card account under an
open-end (not home-secured) consumer
credit plan and either:
(i) The cardholder can obtain extensions of credit on the account; or
(ii) There is an outstanding balance
on the account that has not been
charged off. An account that has been
suspended temporarily (for example,
due to a report by the cardholder of unauthorized use of the card) is considered an ‘‘open account’’ or ‘‘open credit
card account.’’
(7) Pricing information. For purposes
of this section, ‘‘pricing information’’
means the information listed in
§ 1026.6(b)(2)(i) through (b)(2)(xii). Pricing information does not include temporary or promotional rates and terms
or rates and terms that apply only to
protected balances.
(8) Private label credit card account and
private label credit card plan. For purposes of this section:
(i) ‘‘private label credit card account’’ means a credit card account
under an open-end (not home-secured)
consumer credit plan with a credit card
that can be used to make purchases
only at a single merchant or an affiliated group of merchants; and
(ii) ‘‘private label credit card plan’’
means all of the private label credit
card accounts issued by a particular
issuer with credit cards usable at the
same single merchant or affiliated
group of merchants.
(c) Submission of agreements to Bureau—(1) Quarterly submissions. A card
issuer must make quarterly submissions to the Bureau, in the form and
manner specified by the Bureau. Quar-

terly submissions must be sent to the
Bureau no later than the first business
day on or after January 31, April 30,
July 31, and October 31 of each year.
Each submission must contain:
(i) Identifying information about the
card issuer and the agreements submitted, including the issuer’s name,
address, and identifying number (such
as an RSSD ID number or tax identification number);
(ii) The credit card agreements that
the card issuer offered to the public as
of the last business day of the preceding calendar quarter that the card
issuer has not previously submitted to
the Bureau;
(iii) Any credit card agreement previously submitted to the Bureau that
was amended during the preceding calendar quarter and that the card issuer
offered to the public as of the last business day of the preceding calendar
quarter, as described in § 1026.58(c)(3);
and
(iv) Notification regarding any credit
card agreement previously submitted
to the Bureau that the issuer is withdrawing, as described in § 1026.58(c)(4),
(c)(5), (c)(6), and (c)(7).
(2) [Reserved]
(3) Amended agreements. If a credit
card agreement has been submitted to
the Bureau, the agreement has not
been amended and the card issuer continues to offer the agreement to the
public, no additional submission regarding that agreement is required. If a
credit card agreement that previously
has been submitted to the Bureau is
amended and the card issuer offered
the amended agreement to the public
as of the last business day of the calendar quarter in which the change became effective, the card issuer must
submit the entire amended agreement
to the Bureau, in the form and manner
specified by the Bureau, by the first
quarterly submission deadline after the
last day of the calendar quarter in
which the change became effective.
(4) Withdrawal of agreements. If a card
issuer no longer offers to the public a
credit card agreement that previously
has been submitted to the Bureau, the
card issuer must notify the Bureau, in
the form and manner specified by the
Bureau, by the first quarterly submission deadline after the last day of the

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§ 1026.58

12 CFR Ch. X (1–1–21 Edition)

calendar quarter in which the issuer
ceased to offer the agreement.
(5) De minimis exception. (i) A card
issuer is not required to submit any
credit card agreements to the Bureau if
the card issuer had fewer than 10,000
open credit card accounts as of the last
business day of the calendar quarter.
(ii) If an issuer that previously qualified for the de minimis exception
ceases to qualify, the card issuer must
begin making quarterly submissions to
the Bureau no later than the first quarterly submission deadline after the
date as of which the issuer ceased to
qualify.
(iii) If a card issuer that did not previously qualify for the de minimis exception qualifies for the de minimis exception, the card issuer must continue
to make quarterly submissions to the
Bureau until the issuer notifies the Bureau that the card issuer is withdrawing all agreements it previously
submitted to the Bureau.
(6) Private label credit card exception.
(i) A card issuer is not required to submit to the Bureau a credit card agreement if, as of the last business day of
the calendar quarter, the agreement:
(A) Is offered for accounts under one
or more private label credit card plans
each of which has fewer than 10,000
open accounts; and
(B) Is not offered to the public other
than for accounts under such a plan.
(ii) If an agreement that previously
qualified for the private label credit
card exception ceases to qualify, the
card issuer must submit the agreement
to the Bureau no later than the first
quarterly submission deadline after the
date as of which the agreement ceased
to qualify.
(iii) If an agreement that did not previously qualify for the private label
credit card exception qualifies for the
exception, the card issuer must continue to make quarterly submissions to
the Bureau with respect to that agreement until the issuer notifies the Bureau that the agreement is being withdrawn.
(7) Product testing exception. (i) A card
issuer is not required to submit to the
Bureau a credit card agreement if, as of
the last business day of the calendar
quarter, the agreement:

(A) Is offered as part of a product test
offered to only a limited group of consumers for a limited period of time;
(B) Is used for fewer than 10,000 open
accounts; and
(C) Is not offered to the public other
than in connection with such a product
test.
(ii) If an agreement that previously
qualified for the product testing exception ceases to qualify, the card issuer
must submit the agreement to the Bureau no later than the first quarterly
submission deadline after the date as of
which the agreement ceased to qualify.
(iii) If an agreement that did not previously qualify for the product testing
exception qualifies for the exception,
the card issuer must continue to make
quarterly submissions to the Bureau
with respect to that agreement until
the issuer notifies the Bureau that the
agreement is being withdrawn.
(8) Form and content of agreements submitted to the Bureau—(i) Form and content generally. (A) Each agreement
must contain the provisions of the
agreement and the pricing information
in effect as of the last business day of
the preceding calendar quarter.
(B) Agreements must not include any
personally identifiable information relating to any cardholder, such as name,
address, telephone number, or account
number.
(C) The following are not deemed to
be part of the agreement for purposes
of § 1026.58, and therefore are not required to be included in submissions to
the Bureau:
(1) Disclosures required by state or
Federal law, such as affiliate marketing notices, privacy policies, billing
rights notices, or disclosures under the
E-Sign Act;
(2) Solicitation materials;
(3) Periodic statements;
(4) Ancillary agreements between the
issuer and the consumer, such as debt
cancellation contracts or debt suspension agreements;
(5) Offers for credit insurance or
other optional products and other similar advertisements; and
(6) Documents that may be sent to
the consumer along with the credit
card or credit card agreement such as a
cover letter, a validation sticker on the

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Bur. of Consumer Financial Protection

§ 1026.58

card, or other information about card
security.
(D) Agreements must be presented in
a clear and legible font.
(ii) Pricing information. (A) Pricing information must be set forth in a single
addendum to the agreement. The addendum must contain all of the pricing
information,
as
defined
by
§ 1026.58(b)(7). The addendum may, but
is not required to, contain any other
information listed in § 1026.6(b), provided that information is complete and
accurate as of the applicable date
under § 1026.58. The addendum may not
contain any other information.
(B) Pricing information that may
vary from one cardholder to another
depending on the cardholder’s creditworthiness or state of residence or
other factors must be disclosed either
by setting forth all the possible variations (such as purchase APRs of 13
percent, 15 percent, 17 percent, and 19
percent) or by providing a range of possible variations (such as purchase
APRs ranging from 13 percent to 19
percent).
(C) If a rate included in the pricing
information is a variable rate, the
issuer must identify the index or formula used in setting the rate and the
margin. Rates that may vary from one
cardholder to another must be disclosed by providing the index and the
possible margins (such as the prime
rate plus 5 percent, 8 percent, 10 percent, or 12 percent) or range of margins
(such as the prime rate plus from 5 to
12 percent). The value of the rate and
the value of the index are not required
to be disclosed.
(iii) Optional variable terms addendum.
Provisions of the agreement other than
the pricing information that may vary
from one cardholder to another depending on the cardholder’s creditworthiness or state of residence or other factors may be set forth in a single addendum to the agreement separate from
the pricing information addendum.
(iv) Integrated agreement. Issuers may
not provide provisions of the agreement or pricing information in the
form of change-in-terms notices or riders (other than the pricing information
addendum and the optional variable
terms addendum). Changes in provisions or pricing information must be

integrated into the text of the agreement, the pricing information addendum or the optional variable terms addendum, as appropriate.
(d) Posting of agreements offered to the
public. (1) Except as provided below, a
card issuer must post and maintain on
its publicly available Web site the
credit card agreements that the issuer
is required to submit to the Bureau
under § 1026.58(c). With respect to an
agreement offered solely for accounts
under one or more private label credit
card plans, an issuer may fulfill this requirement by posting and maintaining
the agreement in accordance with the
requirements of this section on the
publicly available Web site of at least
one of the merchants at which credit
cards issued under each private label
credit card plan with 10,000 or more
open accounts may be used.
(2) Except as provided in § 1026.58(d),
agreements
posted
pursuant
to
§ 1026.58(d) must conform to the form
and content requirements for agreements submitted to the Bureau specified in § 1026.58(c)(8).
(3) Agreements posted pursuant to
§ 1026.58(d) may be posted in any electronic format that is readily usable by
the general public. Agreements must
be placed in a location that is prominent and readily accessible by the public and must be accessible without submission of personally identifiable information.
(4) The card issuer must update the
agreements posted on its Web site pursuant to § 1026.58(d) at least as frequently as the quarterly schedule required for submission of agreements to
the Bureau under § 1026.58(c). If the
issuer chooses to update the agreements on its Web site more frequently,
the agreements posted on the issuer’s
Web site may contain the provisions of
the agreement and the pricing information in effect as of a date other than
the last business day of the preceding
calendar quarter.
(e) Agreements for all open accounts—
(1) Availability of individual cardholder’s
agreement. With respect to any open
credit card account, a card issuer must
either:
(i) Post and maintain the cardholder’s agreement on its Web site; or

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§ 1026.58

12 CFR Ch. X (1–1–21 Edition)

(ii) Promptly provide a copy of the
cardholder’s agreement to the cardholder upon the cardholder’s request. If
the card issuer makes an agreement
available upon request, the issuer must
provide the cardholder with the ability
to request a copy of the agreement
both by using the issuer’s Web site
(such as by clicking on a clearly identified box to make the request) and by
calling a readily available telephone
line the number for which is displayed
on the issuer’s Web site and clearly
identified as to purpose. The card
issuer must send to the cardholder or
otherwise make available to the cardholder a copy of the cardholder’s agreement in electronic or paper form no
later than 30 days after the issuer receives the cardholder’s request.
(2) Special rule for issuers without
interactive Web sites. An issuer that does
not maintain a Web site from which
cardholders can access specific information about their individual accounts, instead of complying with
§ 1026.58(e)(1), may make agreements
available upon request by providing the
cardholder with the ability to request a
copy of the agreement by calling a
readily available telephone line, the
number for which is displayed on the
issuer’s Web site and clearly identified
as to purpose or included on each periodic statement sent to the cardholder
and clearly identified as to purpose.
The issuer must send to the cardholder
or otherwise make available to the
cardholder a copy of the cardholder’s
agreement in electronic or paper form
no later than 30 days after the issuer
receives the cardholder’s request.
(3) Form and content of agreements. (i)
Except as provided in § 1026.58(e), agreements posted on the card issuer’s Web
site pursuant to § 1026.58(e)(1)(i) or
made available upon the cardholder’s
request pursuant to § 1026.58(e)(1)(ii) or
(e)(2) must conform to the form and
content requirements for agreements
submitted to the Bureau specified in
§ 1026.58(c)(8).
(ii) If the card issuer posts an agreement on its Web site or otherwise provides an agreement to a cardholder
electronically under § 1026.58(e), the
agreement may be posted or provided
in any electronic format that is readily
usable by the general public and must

be placed in a location that is prominent and readily accessible to the cardholder.
(iii) Agreements posted or otherwise
provided pursuant to § 1026.58(e) may
contain personally identifiable information relating to the cardholder, such
as name, address, telephone number, or
account number, provided that the
issuer takes appropriate measures to
make the agreement accessible only to
the cardholder or other authorized persons.
(iv) Agreements posted or otherwise
provided pursuant to § 1026.58(e) must
set forth the specific provisions and
pricing information applicable to the
particular cardholder. Provisions and
pricing information must be complete
and accurate as of a date no more than
60 days prior to:
(A) The date on which the agreement
is posted on the card issuer’s Web site
under § 1026.58(e)(1)(i); or
(B) The date the cardholder’s request
is received under § 1026.58(e)(1)(ii) or
(e)(2).
(v) Agreements provided upon cardholder
request
pursuant
to
§ 1026.58(e)(1)(ii) or (e)(2) may be provided by the issuer in either electronic
or paper form, regardless of the form of
the cardholder’s request.
(f) E-Sign Act requirements. Card
issuers may provide credit card agreements in electronic form under
§ 1026.58(d) and (e) without regard to
the consumer notice and consent requirements of section 101(c) of the
Electronic Signatures in Global and
National Commerce Act (E-Sign Act)
(15 U.S.C. 7001 et seq.).
(g) Temporary suspension of agreement
submission requirement—(1) Quarterly
submissions. The quarterly submission
requirement in paragraph (c) of this
section is suspended for the submissions that would otherwise be due to
the Bureau by the first business day on
or after April 30, 2015; July 31, 2015; October 31, 2015; and January 31, 2016.
(2) Posting of agreements offered to the
public. Nothing in paragraph (g)(1) of
this section shall affect the agreement
posting requirements in paragraph (d)
of this section.
[76 FR 79772, Dec. 22, 2011, as amended at 80
FR 21158, Apr. 17, 2015]

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Bur. of Consumer Financial Protection

§ 1026.59

§ 1026.59 Reevaluation of rate increases.
(a) General rule—(1) Evaluation of increased rate. If a card issuer increases
an annual percentage rate that applies
to a credit card account under an openend (not home-secured) consumer credit plan, based on the credit risk of the
consumer, market conditions, or other
factors, or increased such a rate on or
after January 1, 2009, and 45 days’ advance notice of the rate increase is required pursuant to § 1026.9(c)(2) or (g),
the card issuer must:
(i) Evaluate the factors described in
paragraph (d) of this section; and
(ii) Based on its review of such factors, reduce the annual percentage rate
applicable to the consumer’s account,
as appropriate.
(2) Rate reductions—(i) Timing. If a
card issuer is required to reduce the
rate applicable to an account pursuant
to paragraph (a)(1) of this section, the
card issuer must reduce the rate not
later than 45 days after completion of
the evaluation described in paragraph
(a)(1).
(ii) Applicability of rate reduction. Any
reduction in an annual percentage rate
required pursuant to paragraph (a)(1) of
this section shall apply to:
(A) Any outstanding balances to
which the increased rate described in
paragraph (a)(1) of this section has
been applied; and
(B) New transactions that occur after
the effective date of the rate reduction
that would otherwise have been subject
to the increased rate.
(b) Policies and procedures. A card
issuer must have reasonable written
policies and procedures in place to conduct the review described in paragraph
(a) of this section.
(c) Timing. A card issuer that is subject to paragraph (a) of this section
must conduct the review described in
paragraph (a)(1) of this section not less
frequently than once every six months
after the rate increase.
(d) Factors—(1) In general. Except as
provided in paragraph (d)(2) of this section, a card issuer must review either:
(i) The factors on which the increase
in an annual percentage rate was originally based; or
(ii) The factors that the card issuer
currently considers when determining

the annual percentage rates applicable
to similar new credit card accounts
under an open-end (not home-secured)
consumer credit plan.
(2) Rate increases imposed between January 1, 2009 and February 21, 2010. For
rate increases imposed between January 1, 2009 and February 21, 2010, an
issuer must consider the factors described in paragraph (d)(1)(ii) when
conducting the first two reviews required under paragraph (a) of this section, unless the rate increase subject to
paragraph (a) of this section was based
solely upon factors specific to the consumer, such as a decline in the consumer’s credit risk, the consumer’s delinquency or default, or a violation of
the terms of the account.
(e) Rate increases due to delinquency. If
an issuer increases a rate applicable to
a consumer’s account pursuant to
§ 1026.55(b)(4) based on the card issuer
not receiving the consumer’s required
minimum periodic payment within 60
days after the due date, the issuer is
not required to perform the review described in paragraph (a) of this section
prior to the sixth payment due date
after the effective date of the increase.
However, if the annual percentage rate
applicable to the consumer’s account is
not
reduced
pursuant
to
§ 1026.55(b)(4)(ii), the card issuer must
perform the review described in paragraph (a) of this section. The first such
review must occur no later than six
months after the sixth payment due
following the effective date of the rate
increase.
(f) Termination of obligation to review
factors. The obligation to review factors described in paragraph (a) and (d)
of this section ceases to apply:
(1) If the issuer reduces the annual
percentage rate applicable to a credit
card account under an open-end (not
home-secured) consumer credit plan to
the rate applicable immediately prior
to the increase, or, if the rate applicable immediately prior to the increase
was a variable rate, to a variable rate
determined by the same formula (index
and margin) that was used to calculate
the rate applicable immediately prior
to the increase; or
(2) If the issuer reduces the annual
percentage rate to a rate that is lower

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§ 1026.60

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than the rate described in paragraph
(f)(1) of this section.
(g) Acquired accounts—(1) General. Except as provided in paragraph (g)(2) of
this section, this section applies to
credit card accounts that have been acquired by the card issuer from another
card issuer. A card issuer that complies
with this section by reviewing the factors described in paragraph (d)(1)(i)
must review the factors considered by
the card issuer from which it acquired
the accounts in connection with the
rate increase.
(2) Review of acquired portfolio. If, not
later than six months after the acquisition of such accounts, a card issuer reviews all of the credit card accounts it
acquires in accordance with the factors
that it currently considers in determining the rates applicable to its similar new credit card accounts:
(i) Except as provided in paragraph
(g)(2)(iii), the card issuer is required to
conduct reviews described in paragraph
(a) of this section only for rate increases that are imposed as a result of
its review under this paragraph. See
§§ 1026.9 and 1026.55 for additional requirements regarding rate increases on
acquired accounts.
(ii) Except as provided in paragraph
(g)(2)(iii) of this section, the card
issuer is not required to conduct reviews in accordance with paragraph (a)
of this section for any rate increases
made prior to the card issuer’s acquisition of such accounts.
(iii) If as a result of the card issuer’s
review, an account is subject to, or
continues to be subject to, an increased
rate as a penalty, or due to the consumer’s delinquency or default, the requirements of paragraph (a) of this section apply.
(h) Exceptions—(1) Servicemembers Civil
Relief Act exception. The requirements
of this section do not apply to increases in an annual percentage rate
that was previously decreased pursuant
to 50 U.S.C. app. 527, provided that such
a rate increase is made in accordance
with § 1026.55(b)(6).
(2) Charged off accounts. The requirements of this section do not apply to
accounts that the card issuer has
charged off in accordance with loanloss provisions.

§ 1026.60 Credit and charge card applications and solicitations.
(a) General rules. The card issuer shall
provide the disclosures required under
this section on or with a solicitation or
an application to open a credit or
charge card account.
(1) Definition of solicitation. For purposes of this section, the term solicitation means an offer by the card issuer
to open a credit or charge card account
that does not require the consumer to
complete an application. A ‘‘firm offer
of credit’’ as defined in section 603(l) of
the Fair Credit Reporting Act (15
U.S.C. 1681a(l)) for a credit or charge
card is a solicitation for purposes of
this section.
(2) Form of disclosures; tabular format.
(i) The disclosures in paragraphs (b)(1)
through (5) (except for (b)(1)(iv)(B)) and
(b)(7) through (15) of this section made
pursuant to paragraph (c), (d)(2), (e)(1)
or (f) of this section generally shall be
in the form of a table with headings,
content, and format substantially similar to any of the applicable tables
found in G–10 in appendix G to this
part.
(ii) The table described in paragraph
(a)(2)(i) of this section shall contain
only the information required or permitted by this section. Other information may be presented on or with an
application or solicitation, provided
such information appears outside the
required table.
(iii) Disclosures required by paragraphs (b)(1)(iv)(B), (b)(1)(iv)(C) and
(b)(6) of this section must be placed directly beneath the table.
(iv) When a tabular format is required, any annual percentage rate required to be disclosed pursuant to paragraph (b)(1) of this section, any introductory rate required to be disclosed
pursuant to paragraph (b)(1)(ii) of this
section, any rate that will apply after
a premium initial rate expires required
to be disclosed under paragraph
(b)(1)(iii) of this section, and any fee or
percentage amounts or maximum limits on fee amounts disclosed pursuant
to paragraphs (b)(2), (b)(4), (b)(8)
through (b)(13) of this section must be
disclosed in bold text. However, bold
text shall not be used for: The amount
of any periodic fee disclosed pursuant
to paragraph (b)(2) of this section that

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Bur. of Consumer Financial Protection

§ 1026.60

is not an annualized amount; and other
annual percentage rates or fee amounts
disclosed in the table.
(v) For an application or a solicitation that is accessed by the consumer
in electronic form, the disclosures required under this section may be provided to the consumer in electronic
form on or with the application or solicitation.
(vi)(A) Except as provided in paragraph (a)(2)(vi)(B) of this section, the
table described in paragraph (a)(2)(i) of
this section must be provided in a
prominent location on or with an application or a solicitation.
(B) If the table described in paragraph (a)(2)(i) of this section is provided electronically, it must be provided in close proximity to the application or solicitation.
(3) Fees based on a percentage. If the
amount of any fee required to be disclosed under this section is determined
on the basis of a percentage of another
amount, the percentage used and the
identification of the amount against
which the percentage is applied may be
disclosed instead of the amount of the
fee.
(4) Fees that vary by state. Card
issuers that impose fees referred to in
paragraphs (b)(8) through (12) of this
section that vary by state may, at the
issuer’s option, disclose in the table required by paragraph (a)(2)(i) of this section: The specific fee applicable to the
consumer’s account; or the range of the
fees, if the disclosure includes a statement that the amount of the fee varies
by state and refers the consumer to a
disclosure provided with the table
where the amount of the fee applicable
to the consumer’s account is disclosed.
A card issuer may not list fees for multiple states in the table.
(5) Exceptions. This section does not
apply to:
(i) Home-equity plans accessible by a
credit or charge card that are subject
to the requirements of § 1026.40;
(ii) Overdraft lines of credit tied to
asset accounts accessed by check-guarantee cards or by debit cards;
(iii) Lines of credit accessed by
check-guarantee cards or by debit
cards that can be used only at automated teller machines;

(iv) Lines of credit accessed solely by
account numbers except for a covered
separate credit feature solely accessible by an account number that is a
hybrid prepaid-credit card as defined in
§ 1026.61;
(v) Additions of a credit or charge
card to an existing open-end plan;
(vi) General purpose applications unless the application, or material accompanying it, indicates that it can be
used to open a credit or charge card account; or
(vii) Consumer-initiated requests for
applications.
(b) Required disclosures. The card
issuer shall disclose the items in this
paragraph on or with an application or
a solicitation in accordance with the
requirements of paragraphs (c), (d),
(e)(1), or (f) of this section. A credit
card issuer shall disclose all applicable
items in this paragraph except for
paragraph (b)(7) of this section. A
charge card issuer shall disclose the applicable items in paragraphs (b)(2), (4),
(7) through (12), and (15) of this section.
With respect to a covered separate
credit feature that is a charge card account accessible by a hybrid prepaidcredit card as defined in § 1026.61, a
charge card issuer also shall disclose
the applicable items in paragraphs
(b)(3), (13), and (14) of this section.
(1) Annual percentage rate. Each periodic rate that may be used to compute
the finance charge on an outstanding
balance for purchases, a cash advance,
or a balance transfer, expressed as an
annual percentage rate (as determined
by § 1026.14(b)). When more than one
rate applies for a category of transactions, the range of balances to which
each rate is applicable shall also be disclosed. The annual percentage rate for
purchases disclosed pursuant to this
paragraph shall be in at least 16-point
type, except for the following: Oral disclosures of the annual percentage rate
for purchases; or a penalty rate that
may apply upon the occurrence of one
or more specific events.
(i) Variable rate information. If a rate
disclosed under paragraph (b)(1) of this
section is a variable rate, the card
issuer shall also disclose the fact that
the rate may vary and how the rate is
determined. In describing how the applicable rate will be determined, the

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§ 1026.60

12 CFR Ch. X (1–1–21 Edition)

card issuer must identify the type of
index or formula that is used in setting
the rate. The value of the index and the
amount of the margin that are used to
calculate the variable rate shall not be
disclosed in the table. A disclosure of
any applicable limitations on rate increases shall not be included in the
table.
(ii) Discounted initial rate. If the initial rate is an introductory rate, as
that term is defined in § 1026.16(g)(2)(ii),
the card issuer must disclose in the
table the introductory rate, the time
period during which the introductory
rate will remain in effect, and must use
the term ‘‘introductory’’ or ‘‘intro’’ in
immediate proximity to the introductory rate. The card issuer also must
disclose the rate that would otherwise
apply to the account pursuant to paragraph (b)(1) of this section. Where the
rate is not tied to an index or formula,
the card issuer must disclose the rate
that will apply after the introductory
rate expires. In a variable-rate account, the card issuer must disclose a
rate based on the applicable index or
formula in accordance with the accuracy requirements set forth in paragraphs (c)(2), (d)(3), or (e)(4) of this section, as applicable.
(iii) Premium initial rate. If the initial
rate is temporary and is higher than
the rate that will apply after the temporary rate expires, the card issuer
must disclose the premium initial rate
pursuant to paragraph (b)(1) of this section and the time period during which
the premium initial rate will remain in
effect. Consistent with paragraph (b)(1)
of this section, the premium initial
rate for purchases must be in at least
16-point type. The issuer must also disclose in the table the rate that will
apply after the premium initial rate
expires, in at least 16-point type.
(iv) Penalty rates—(A) In general. Except
as
provided
in
paragraph
(b)(1)(iv)(B) and (C) of this section, if a
rate may increase as a penalty for one
or more events specified in the account
agreement, such as a late payment or
an extension of credit that exceeds the
credit limit, the card issuer must disclose pursuant to this paragraph (b)(1)
the increased rate that may apply, a
brief description of the event or events
that may result in the increased rate,

and a brief description of how long the
increased rate will remain in effect.
(B) Introductory rates. If the issuer
discloses an introductory rate, as that
term is defined in § 1026.16(g)(2)(ii), in
the table or in any written or electronic promotional materials accompanying applications or solicitations
subject to paragraph (c) or (e) of this
section, the issuer must briefly disclose
directly beneath the table the circumstances, if any, under which the introductory rate may be revoked, and
the type of rate that will apply after
the introductory rate is revoked.
(C) Employee preferential rates. If a
card issuer discloses in the table a preferential annual percentage rate for
which only employees of the card
issuer, employees of a third party, or
other individuals with similar affiliations with the card issuer or third
party, such as executive officers, directors, or principal shareholders are eligible, the card issuer must briefly disclose directly beneath the table the
circumstances under which such preferential rate may be revoked, and the
rate that will apply after such preferential rate is revoked.
(v) Rates that depend on consumer’s
creditworthiness. If a rate cannot be determined at the time disclosures are
given because the rate depends, at least
in part, on a later determination of the
consumer’s creditworthiness, the card
issuer must disclose the specific rates
or the range of rates that could apply
and a statement that the rate for
which the consumer may qualify at account opening will depend on the consumer’s creditworthiness, and other
factors if applicable. If the rate that
depends, at least in part, on a later determination of the consumer’s creditworthiness is a penalty rate, as described in paragraph (b)(1)(iv) of this
section, the card issuer at its option
may disclose the highest rate that
could apply, instead of disclosing the
specific rates or the range of rates that
could apply.
(vi) APRs that vary by state. Issuers
imposing annual percentage rates that
vary by state may, at the issuer’s option, disclose in the table: the specific
annual percentage rate applicable to
the consumer’s account; or the range of

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Bur. of Consumer Financial Protection

§ 1026.60

the annual percentage rates, if the disclosure includes a statement that the
annual percentage rate varies by state
and refers the consumer to a disclosure
provided with the table where the annual percentage rate applicable to the
consumer’s account is disclosed. A card
issuer may not list annual percentage
rates for multiple states in the table.
(2) Fees for issuance or availability. (i)
Any annual or other periodic fee that
may be imposed for the issuance or
availability of a credit or charge card,
including any fee based on account activity or inactivity; how frequently it
will be imposed; and the annualized
amount of the fee.
(ii) Any non-periodic fee that relates
to opening an account. A card issuer
must disclose that the fee is a one-time
fee.
(3) Fixed finance charge; minimum interest charge. Any fixed finance charge
and a brief description of the charge.
Any minimum interest charge if it exceeds $1.00 that could be imposed during a billing cycle, and a brief description of the charge. The $1.00 threshold
amount shall be adjusted periodically
by the Bureau to reflect changes in the
Consumer Price Index. The Bureau
shall calculate each year a price level
adjusted minimum interest charge
using the Consumer Price Index in effect on June 1 of that year. When the
cumulative change in the adjusted
minimum value derived from applying
the annual Consumer Price level to the
current minimum interest charge
threshold has risen by a whole dollar,
the minimum interest charge will be
increased by $1.00. The issuer may, at
its option, disclose in the table minimum interest charges below this
threshold.
(4) Transaction charges. Any transaction charge imposed by the card
issuer for the use of the card for purchases.
(5) Grace period. The date by which or
the period within which any credit extended for purchases may be repaid
without incurring a finance charge due
to a periodic interest rate and any conditions on the availability of the grace
period. If no grace period is provided,
that fact must be disclosed. If the
length of the grace period varies, the
card issuer may disclose the range of

days, the minimum number of days, or
the average number of days in the
grace period, if the disclosure is identified as a range, minimum, or average.
In disclosing in the tabular format a
grace period that applies to all types of
purchases, the phrase ‘‘How to Avoid
Paying Interest on Purchases’’ shall be
used as the heading for the row describing the grace period. If a grace period
is not offered on all types of purchases,
in disclosing this fact in the tabular
format, the phrase ‘‘Paying Interest’’
shall be used as the heading for the row
describing this fact.
(6) Balance computation method. The
name of the balance computation
method listed in paragraph (g) of this
section that is used to determine the
balance for purchases on which the finance charge is computed, or an explanation of the method used if it is not
listed. In determining which balance
computation method to disclose, the
card issuer shall assume that credit extended for purchases will not be repaid
within the grace period, if any.
(7) Statement on charge card payments.
A statement that charges incurred by
use of the charge card are due when the
periodic statement is received.
(8) Cash advance fee. Any fee imposed
for an extension of credit in the form of
cash or its equivalent.
(9) Late payment fee. Any fee imposed
for a late payment.
(10) Over-the-limit fee. Any fee imposed for exceeding a credit limit.
(11) Balance transfer fee. Any fee imposed to transfer an outstanding balance.
(12) Returned-payment fee. Any fee imposed by the card issuer for a returned
payment.
(13) Required insurance, debt cancellation or debt suspension coverage. (i) A fee
for insurance described in § 1026.4(b)(7)
or debt cancellation or suspension coverage described in § 1026.4(b)(10), if the
insurance or debt cancellation or suspension coverage is required as part of
the plan; and
(ii) A cross reference to any additional information provided about the
insurance or coverage accompanying
the application or solicitation, as applicable.

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§ 1026.60

12 CFR Ch. X (1–1–21 Edition)

(14) Available credit. If a card issuer
requires fees for the issuance or availability of credit described in paragraph
(b)(2) of this section, or requires a security deposit for such credit, and the
total amount of those required fees
and/or security deposit that will be imposed and charged to the account when
the account is opened is 15 percent or
more of the minimum credit limit for
the card, a card issuer must disclose
the available credit remaining after
these fees or security deposit are debited to the account, assuming that the
consumer receives the minimum credit
limit. In determining whether the 15
percent threshold test is met, the
issuer must only consider fees for
issuance or availability of credit, or a
security deposit, that are required. If
fees for issuance or availability are optional, these fees should not be considered in determining whether the disclosure must be given. Nonetheless, if the
15 percent threshold test is met, the
issuer in providing the disclosure must
disclose the amount of available credit
calculated by excluding those optional
fees, and the available credit including
those optional fees. This paragraph
does not apply with respect to fees or
security deposits that are not debited
to the account.
(15) Web site reference. A reference to
the Web site established by the Bureau
and a statement that consumers may
obtain on the Web site information
about shopping for and using credit
cards. Until January 1, 2013, issuers
may substitute for this reference a reference to the Web site established by
the Board of Governors of the Federal
Reserve System.
(c) Direct mail and electronic applications and solicitations—(1) General. The
card issuer shall disclose the applicable
items in paragraph (b) of this section
on or with an application or solicitation that is mailed to consumers or
provided to consumers in electronic
form.
(2) Accuracy. (i) Disclosures in direct
mail applications and solicitations
must be accurate as of the time the
disclosures are mailed. An accurate
variable annual percentage rate is one
in effect within 60 days before mailing.
(ii) Disclosures provided in electronic
form must be accurate as of the time

they are sent, in the case of disclosures
sent to a consumer’s email address, or
as of the time they are viewed by the
public, in the case of disclosures made
available at a location such as a card
issuer’s Web site. An accurate variable
annual percentage rate provided in
electronic form is one in effect within
30 days before it is sent to a consumer’s
email address, or viewed by the public,
as applicable.
(d) Telephone applications and solicitations—(1) Oral disclosure. The card
issuer shall disclose orally the information in paragraphs (b)(1) through (7)
and (b)(14) of this section, to the extent
applicable, in a telephone application
or solicitation initiated by the card
issuer.
(2) Alternative disclosure. The oral disclosure under paragraph (d)(1) of this
section need not be given if the card
issuer either:
(i)(A) Does not impose a fee described
in paragraph (b)(2) of this section; or
(B) Imposes such a fee but provides
the consumer with a right to reject the
plan consistent with § 1026.5(b)(1)(iv);
and
(ii) The card issuer discloses in writing within 30 days after the consumer
requests the card (but in no event later
than the delivery of the card) the following:
(A) The applicable information in
paragraph (b) of this section; and
(B) As applicable, the fact that the
consumer has the right to reject the
plan and not be obligated to pay fees
described in paragraph (b)(2) or any
other fees or charges until the consumer has used the account or made a
payment on the account after receiving
a billing statement.
(3) Accuracy. (i) The oral disclosures
under paragraph (d)(1) of this section
must be accurate as of the time they
are given.
(ii) The alternative disclosures under
paragraph (d)(2) of this section generally must be accurate as of the time
they are mailed or delivered. A variable annual percentage rate is one that
is accurate if it was:
(A) In effect at the time the disclosures are mailed or delivered; or
(B) In effect as of a specified date
(which rate is then updated from time

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Bur. of Consumer Financial Protection

§ 1026.61

to time, but no less frequently than
each calendar month).
(e) Applications and solicitations made
available to general public. The card
issuer shall provide disclosures, to the
extent applicable, on or with an application or solicitation that is made
available to the general public, including one contained in a catalog, magazine, or other generally available publication. The disclosures shall be provided in accordance with paragraph
(e)(1) or (e)(2) of this section.
(1) Disclosure of required credit information. The card issuer may disclose in
a prominent location on the application or solicitation the following:
(i) The applicable information in
paragraph (b) of this section;
(ii) The date the required information was printed, including a statement
that the required information was accurate as of that date and is subject to
change after that date; and
(iii) A statement that the consumer
should contact the card issuer for any
change in the required information
since it was printed, and a toll-free
telephone number or a mailing address
for that purpose.
(2) No disclosure of credit information.
If none of the items in paragraph (b) of
this section is provided on or with the
application or solicitation, the card
issuer may state in a prominent location on the application or solicitation
the following:
(i) There are costs associated with
the use of the card; and
(ii) The consumer may contact the
card issuer to request specific information about the costs, along with a tollfree telephone number and a mailing
address for that purpose.
(3) Prompt response to requests for information. Upon receiving a request for
any of the information referred to in
this paragraph, the card issuer shall
promptly and fully disclose the information requested.
(4) Accuracy. The disclosures given
pursuant to paragraph (e)(1) of this section must be accurate as of the date of
printing. A variable annual percentage
rate is accurate if it was in effect within 30 days before printing.
(f) In-person applications and solicitations. A card issuer shall disclose the
information in paragraph (b) of this

section, to the extent applicable, on or
with an application or solicitation that
is initiated by the card issuer and
given to the consumer in person. A
card issuer complies with the requirements of this paragraph if the issuer
provides disclosures in accordance with
paragraph (c)(1) or (e)(1) of this section.
(g) Balance computation methods defined. The following methods may be
described by name. Methods that differ
due to variations such as the allocation
of payments, whether the finance
charge begins to accrue on the transaction date or the date of posting the
transaction, the existence or length of
a grace period, and whether the balance is adjusted by charges such as late
payment fees, annual fees and unpaid
finance charges do not constitute separate balance computation methods.
(1)(i) Average daily balance (including
new purchases). This balance is figured
by adding the outstanding balance (including new purchases and deducting
payments and credits) for each day in
the billing cycle, and then dividing by
the number of days in the billing cycle.
(ii) Average daily balance (excluding
new purchases). This balance is figured
by adding the outstanding balance (excluding new purchases and deducting
payments and credits) for each day in
the billing cycle, and then dividing by
the number of days in the billing cycle.
(2) Adjusted balance. This balance is
figured by deducting payments and
credits made during the billing cycle
from the outstanding balance at the
beginning of the billing cycle.
(3) Previous balance. This balance is
the outstanding balance at the beginning of the billing cycle.
(4) Daily balance. For each day in the
billing cycle, this balance is figured by
taking the beginning balance each day,
adding any new purchases, and subtracting any payment and credits.
[76 FR 79772, Dec. 22, 2011, as amended at 81
FR 84370, Nov. 22, 2016]

§ 1026.61 Hybrid prepaid-credit cards.
(a) Hybrid prepaid-credit card—(1) In
general. (i) Credit offered in connection
with a prepaid account is subject to
this section and this regulation as
specified below.
(ii) For purposes of this regulation,
except as provided in paragraph (a)(4)

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§ 1026.61

12 CFR Ch. X (1–1–21 Edition)

of this section, a prepaid card is a hybrid prepaid-credit card with respect to
a separate credit feature as described
in paragraph (a)(2)(i) of this section
when it can access credit from that
credit feature, or with respect to a
credit feature structured as a negative
balance on the asset feature of the prepaid account as described in paragraph
(a)(3) of this section when it can access
credit from that credit feature. A hybrid prepaid-credit card is a credit card
for purposes of this regulation with respect to those credit features.
(iii) With respect to a credit feature
structured as a negative balance on the
asset feature of the prepaid account as
described in paragraph (a)(3) of this
section, a prepaid card is not a hybrid
prepaid-credit card or a credit card for
purposes of this regulation if the conditions set forth in paragraph (a)(4) of
this section are met.
(2) Prepaid card can access credit from
a covered separate credit feature—(i) Covered separate credit feature. (A) A separate credit feature that can be accessed
by a hybrid prepaid-credit card as described in this paragraph (a)(2)(i) is defined as a covered separate credit feature. A prepaid card is a hybrid prepaid-credit card with respect to a separate credit feature when it is a single
device that can be used from time to
time to access the separate credit feature where the following two conditions are both satisfied:
(1) The card can be used to draw,
transfer, or authorize the draw or
transfer of credit from the separate
credit feature in the course of authorizing, settling, or otherwise completing
transactions conducted with the card
to obtain goods or services, obtain
cash, or conduct person-to-person
transfers; and
(2) The separate credit feature is offered by the prepaid account issuer, its
affiliate, or its business partner.
(B) A separate credit feature that
meets the conditions set forth in paragraph (a)(2)(i)(A) of this section is a
covered separate credit feature accessible by a hybrid prepaid-credit card
even with respect to credit that is
drawn or transferred, or authorized to
be drawn or transferred, from the credit feature outside the course of a transaction conducted with the card to ob-

tain goods or services, obtain cash, or
conduct person-to-person transfers.
(ii) Non-covered separate credit feature.
A separate credit feature that does not
meet the two conditions set forth in
paragraph (a)(2)(i) of this section is defined as a non-covered separate credit
feature. A prepaid card is not a hybrid
prepaid-credit card with respect to a
non-covered separate credit feature,
even if the prepaid card is a hybrid prepaid-credit card with respect to a covered separate credit feature as described in paragraph (a)(2)(i) of this
section. A non-covered separate credit
feature is not subject to the rules applicable to hybrid prepaid-credit cards;
however, it may be subject to this regulation depending on its own terms and
conditions, independent of the connection to the prepaid account.
(3) Prepaid card can access credit extended through a negative balance on the
asset feature of the prepaid account—(i)
In general. Except as provided in paragraph (a)(4) of this section, a prepaid
card is a hybrid prepaid-credit card
when it is a single device that can be
used from time to time to access credit
extended through a negative balance
on the asset feature of the prepaid account.
(ii) Negative asset balances. Notwithstanding paragraph (a)(3)(i) of this section with regard to coverage under this
regulation, structuring a hybrid prepaid-credit card to access credit
through a negative balance on the
asset feature violates paragraph (b) of
this section. A prepaid account issuer
can use a negative asset balance structure to extend credit on an asset feature of a prepaid account only if the
prepaid card is not a hybrid prepaidcredit card with respect to that credit
as described in paragraph (a)(4) of this
section.
(4) Exception for credit extended
through a negative balance. A prepaid
card is not a hybrid prepaid-credit card
with respect to credit extended
through a negative balance on the
asset feature of the prepaid account
and is not a credit card for purposes of
this regulation with respect to that
credit where:
(i) The prepaid card cannot access
credit from a covered separate credit
feature as described in paragraph

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Bur. of Consumer Financial Protection

§ 1026.61

(a)(2)(i) of this section that is offered
by a prepaid account issuer or its affiliate; and
(ii) The prepaid card only can access
credit extended through a negative balance on the asset feature of the prepaid
account
where
both
paragraphs
(a)(4)(ii)(A) and (B) of this section are
satisfied.
(A) The prepaid account issuer has an
established policy and practice of either declining to authorize any transaction for which it reasonably believes
the consumer has insufficient or unavailable funds in the asset feature of
the prepaid account at the time the
transaction is authorized to cover the
amount of the transaction, or declining
to authorize any such transactions except in one or more of the following
circumstances:
(1) The amount of the transaction
will not cause the asset feature balance
to become negative by more than $10 at
the time of the authorization; or
(2) In cases where the prepaid account issuer has received an instruction or confirmation for an incoming
electronic fund transfer originated
from a separate asset account to load
funds to the prepaid account or where
the prepaid account issuer has received
a request from the consumer to load
funds to the prepaid account from a
separate asset account but in either
case the funds from the separate asset
account have not yet settled, the
amount of the transaction will not
cause the asset feature balance to become negative at the time of the authorization by more than the incoming
or requested load amount, as applicable.
(B) The following fees or charges are
not imposed on the asset feature of the
prepaid account:
(1) Any fees or charges for opening,
issuing, or holding a negative balance
on the asset feature, or for the availability of credit, whether imposed on a
one-time or periodic basis. This paragraph does not include fees or charges
to open, issue, or hold the prepaid account where the amount of the fee or
charge imposed on the asset feature is
not higher based on whether credit
might be offered or has been accepted,
whether or how much credit the con-

sumer has accessed, or the amount of
credit available;
(2) Any fees or charges that will be
imposed only when credit is extended
on the asset feature or when there is a
negative balance on the asset feature,
except that a prepaid account issuer
may impose fees or charges for the actual costs of collecting the credit extended if otherwise permitted by law;
or
(3) Any fees or charges where the
amount of the fee or charge is higher
when credit is extended on the asset
feature or when there is a negative balance on the asset feature.
(C) A prepaid account issuer may
still satisfy the exception in paragraph
(a)(4) of this section even if it debits
fees or charges from the asset feature
when there are insufficient or unavailable funds in the asset feature to cover
those fees or charges at the time they
are imposed, so long as those fees or
charges are not the type of fees or
charges enumerated in paragraph
(a)(4)(ii)(B) of this section.
(5) Definitions. For purposes of this
section and other provisions in the regulation that relate to hybrid prepaidcredit cards:
(i) Affiliate means any company that
controls, is controlled by, or is under
common control with another company, as set forth in the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et
seq.).
(ii) Asset feature means an asset account that is a prepaid account, or an
asset subaccount of a prepaid account.
(iii) Business partner means a person
(other than the prepaid account issuer
or its affiliates) that can extend credit
through a separate credit feature
where the person or its affiliate has an
arrangement with a prepaid account
issuer or its affiliate except as provided
in paragraph (a)(5)(iii)(D) of this section.
(A) Arrangement defined. For purposes
of paragraph (a)(5)(iii) of this section, a
person that can extend credit through
a separate credit feature or the person’s affiliate has an arrangement with
a prepaid account issuer or its affiliate
if the circumstances in either paragraph (a)(5)(iii)(B) or (C) of this section
are met.

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§ 1026.61

12 CFR Ch. X (1–1–21 Edition)

(B) Arrangement by agreement. A person that can extend credit through a
separate credit feature or its affiliate
has an arrangement with a prepaid account issuer or its affiliate if the parties have an agreement that allows the
prepaid card from time to time to
draw, transfer, or authorize a draw or
transfer of credit in the course of authorizing, settling, or otherwise completing transactions conducted with
the card to obtain goods or services,
obtain cash, or conduct person-to-person transfers.
(C) Marketing arrangement. A person
that can extend credit through a separate credit feature or its affiliate has
an arrangement with a prepaid account
issuer or its affiliate if:
(1) The parties have a business, marketing, or promotional agreement or
other arrangement which provides that
prepaid accounts offered by the prepaid
account issuer will be marketed to the
customers of the person that can extend credit; or the separate credit feature offered by the person who can extend credit will be marketed to the
holders of prepaid accounts offered by
the prepaid account issuer (including
any marketing to customers to encourage them to authorize the prepaid card
to access the separate credit feature as
described in paragraph (a)(5)(iii)(C)(2)
of this section); and
(2) At the time of the marketing
agreement or arrangement described in
paragraph (a)(5)(iii)(C)(1) of this section, or at any time afterwards, the
prepaid card from time to time can
draw, transfer, or authorize the draw or
transfer of credit from the separate
credit feature offered by the person
that can extend credit in the course of
authorizing, settling, or otherwise
completing
transactions
conducted
with the card to obtain goods or services, obtain cash, or conduct person-toperson transfers. This requirement is
satisfied even if there is no specific
agreement between the parties that the
card can access the credit feature, as
described in paragraph (a)(5)(iii)(B) of
this section.
(D) Exception for certain credit card account arrangements. For purposes of
paragraph (a)(5)(iii) of this section, a
person that can extend credit through
a credit card account is not a business

partner of a prepaid account issuer
with which it has an arrangement as
defined in paragraphs (a)(5)(iii)(A)
through (C) of this section with regard
to such credit card account if all of the
following conditions are met:
(1) The credit card account is a credit
card account under an open-end (not
home-secured) consumer credit plan
that a consumer can access through a
traditional credit card.
(2) The prepaid account issuer and
the card issuer do not allow the prepaid
card to draw, transfer, or authorize the
draw or transfer of credit from the
credit card account from time to time
in the course of authorizing, settling,
or otherwise completing transactions
conducted with the card to obtain
goods or services, obtain cash, or conduct person-to-person transfers, except
where the prepaid account issuer or the
card issuer has received from the consumer a written request that is separately signed or initialized to authorize
the prepaid card to access the credit
card account as described above. If the
credit card account is linked to the
prepaid account prior to April 1, 2019,
or prior to the arrangement between
the prepaid account issuer and the card
issuer as described in paragraphs
(a)(5)(iii)(A) through (C) of this section,
the prepaid account issuer and the card
issuer will be deemed to have satisfied
this condition even if they have not received from the consumer a written request that is separately signed or
initialized to authorize the prepaid
card to access the credit card account
as described in this paragraph.
(3) The prepaid account issuer and
the card issuer do not condition the acquisition or retention of the prepaid
account or the credit card account on
whether a consumer authorizes the prepaid card to access the credit card account as described in paragraph
(a)(5)(iii)(D)(2) of this section. If the
credit card account is linked to the
prepaid account prior to April 1, 2019,
this condition only applies to the retention of the prepaid account and the
credit card account on or after April 1,
2019.
(4) The prepaid account issuer applies
the same terms, conditions, or features
to the prepaid account when a consumer authorizes linking the prepaid

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Bur. of Consumer Financial Protection

§ 1026.61

card to the credit card account as described in paragraph (a)(5)(iii)(D)(2) of
this section as it applies to the consumer’s prepaid account when the consumer does not authorize such a linkage. In addition, the prepaid account
issuer applies the same fees to load
funds from the credit card account that
is linked to the prepaid account as described above as it charges for a comparable load on the consumer’s prepaid
account to access a credit feature offered by a person that is not the prepaid account issuer, its affiliate, or a
person with which the prepaid account
issuer has an arrangement as described
in paragraphs (a)(5)(iii)(A) through (C)
of this section.
(5) The card issuer applies the same
specified terms and conditions to the
credit card account when a consumer
authorizes linking the prepaid card to
the credit card account as described in
paragraph (a)(5)(iii)(D)(2) of this section as it applies to the consumer’s
credit card account when the consumer
does not authorize such a linkage. In
addition, the card issuer applies the
same specified terms and conditions to
extensions of credit accessed by the
prepaid card from the credit card account as it applies to extensions of
credit accessed by the traditional credit card. For purposes of this paragraph,
‘‘specified
terms
and
conditions’’
means the terms and conditions required to be disclosed under § 1026.6(b),
any repayment terms and conditions,
and the limits on liability for unauthorized credit transactions.
(iv) Credit feature means a separate
credit account or a credit subaccount
of a prepaid account through which
credit can be extended in connection
with a prepaid card, or a negative balance on an asset feature of a prepaid
account through which credit can be
extended in connection with a prepaid
card.
(v) Prepaid account means a prepaid
account as defined in Regulation E, 12
CFR 1005.2(b)(3).
(vi) Prepaid account issuer means a financial institution as defined in Regulation E, 12 CFR 1005.2(i), with respect
to a prepaid account.
(vii) Prepaid card means any card,
code, or other device that can be used
to access a prepaid account.

(viii) Separate credit feature means a
credit account or a credit subaccount
of a prepaid account through which
credit can be extended in connection
with a prepaid card that is separate
from the asset feature of the prepaid
account. This term does not include a
negative balance on an asset feature of
a prepaid account.
(b) Structure of credit features accessible by hybrid prepaid-credit cards. With
respect to a credit feature that is accessible by a hybrid prepaid-credit
card, a card issuer shall not structure
the credit feature as a negative balance
on the asset feature of a prepaid account. A card issuer shall structure the
credit feature as a separate credit feature, either as a separate credit account, or as a credit subaccount of a
prepaid account that is separate from
the asset feature of the prepaid account. The separate credit feature is a
covered separate credit feature accessible by a hybrid prepaid-credit card
under § 1026.61(a)(2)(i).
(c) Timing requirement for credit card
solicitation or application with respect to
hybrid prepaid-credit cards. (1) With respect to a covered separate credit feature that could be accessible by a hybrid prepaid-credit card at any point, a
card issuer must not do any of the following until 30 days after the prepaid
account has been registered:
(i) Open a covered separate credit
feature that could be accessible by the
hybrid prepaid-credit card;
(ii) Make a solicitation or provide an
application to open a covered separate
credit feature that could be accessible
by the hybrid prepaid-credit card; or
(iii) Allow an existing credit feature
that was opened prior to the consumer
obtaining the prepaid account to become a covered separate credit feature
accessible by the hybrid prepaid-credit
card.
(2) For purposes of paragraph (c) of
this section, the term solicitation has
the meaning set forth in § 1026.60(a)(1).
[81 FR 84370, Nov. 22, 2016, as amended at 83
FR 6439, Feb. 13, 2018]

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