Rarely would there be limitations on rate changes, but language is provided for this situation in the last sentence. 2. The disclosures under 707.11(a) must be included on periodic statements provided by a credit union starting with the first statement period that begins after January 1, 2010. (You will be leaving NCUA.gov and accessing a non-NCUA website. You must maintain a minimum average daily balance of $________ in your account to obtain the disclosed annual percentage yield. Resolved, that the Board of Directors has adopted a nondiscriminatory dividend policy, by establishing dividend periods, dividend credit determination dates, dividend distribution dates, any associated penalties (if applicable) and the method of dividend computation for each type of share account. The amount of any fee that may be imposed in connection with the account (or an explanation of how the fee will be determined) and the conditions under which the fee may be imposed. For dividend-bearing share accounts, credit unions may disclose the required information either upon each periodic statement, or on the statement on which dividends are actually earned (credited or posted) to the member's account. This necessitates inclusion of a disclosure of the actual calendar date of the last dividend declaration date or use of the phrase last dividend declaration date. Please call (credit union telephone number) to obtain current rate information.] This process of verifying a member's eligibility status, making a recommendation for membership, and providing account disclosures should be completed within 20 calendar days. Learn more. The increments of par value method, where credit unions only pay dividends on full shares in an account, e.g., a credit union with $5 par value shares pays dividends on $20 of a $24 account balance. You are using an unsupported browser. 1. 2. Part 707 applies to all credit unions that offer share and deposit accounts to residents (including resident aliens) of any state as defined in 707.2(v) and that offer accounts insurable by the National Credit Union Share Insurance Fund (NCUSIF) whether or not such accounts are insured by the NCUSIF. Credit unions may set minimum balance requirements that must be met in order to earn dividends. Has the credit union maintained evidence of compliance for a minimum of 2 years after the date disclosures are required to be made or action is required to be taken? This example contemplates a two-tier system. 3. This necessitates inclusion of a disclosure of the actual calendar date of the last dividend declaration date. In addition, the disclosures required by TISA do not affect the substantive requirements of the EFAA and Regulation CC. (1) Rounding. (c) Notice before maturity for term share accounts longer than one year that do not renew automatically. iv. (The abbreviation APY may be used provided the term annual percentage yield is stated at least once in the advertisement.) Closed accounts. (B) For dividend-bearing accounts other than term share accounts, a credit union shall specify a dividend rate and annual percentage yield (using those terms) as of the last dividend declaration date. 4. If the fee is a maintenance or activity fee under 707.8(a)(2) of this part, however, an advertisement may not describe the account as free or no cost or contain a similar term even if the fee is disclosed in the advertisement. Form of the notice. Use of synonym. Disclosures may be made: ii. A request for a determination should be addressed to NCUA's Office of General Counsel, 1775 Duke Street, Alexandria, VA 22314. 22, 1994; 59 FR 59899, Nov. 21, 1994; 70 FR 72898, Dec. 8, 2005; 78 FR 32544, May 31, 2013]. PDF E-Sign Consent for Execution and Delivery of Electronic Documents Average daily balance accounts. If, during any (time period), your account falls below the required minimum daily balance, your account will be subject to a service fee of $5 for that (time period). Combined statements. (c) Record retention. Federal credit unions may only offer dividend-bearing and non-dividend-bearing share accounts. A flat fee, such as a monthly service fee. If the balance is obtained at an ATM, the requirement also applies whether the balance is disclosed on the ATM screen or on a paper receipt. Your term share account will automatically renew at maturity. Such prospective annual percentage yield may be disclosed either in lieu of, or in addition to, the dividend rate and annual percentage yield as of the last dividend declaration date. Part 707 of the NCUA Rules and Regulations implements the Truth in Savings Act of 1991 (TISA), contained in the Federal Deposit Insurance Corporation Improvement Act of 1991, 12 U.S.C. The annual percentage yield (APY) for this tier will range from ________% to ________%, depending on the balance in the account. (a2) Determination of Minimum Balance To Earn Dividends. The penalty will equal three months' dividends on your deposit. The annual percentage yield earned (using the formula above) is 5.40%: APY Earned = 100 [(1 + 6.50/1,500)(365/30)1]. Other terms are self-explanatory. The requirement applies whether the credit union discloses a balance through an ATM owned or operated by the credit union or through an ATM not owned or operated by the credit union, including an ATM operated by an entity that is not a financial institution. iv. First tier of a tiered-rate account. Fees for overdrawing an account. No minimum balance requirements apply to this account. A credit union complying with the timing rules of Regulation E discloses at the same time fees for electronic services (such as balance inquiry fees imposed if the inquiry is made at an ATM) that are required to be disclosed by this regulation, but not by Regulation E. iv. An example of a language for disclosing the effective date of a change is: As of May 11, 1995. 7001 et seq. Circumstances for nonpayment. Verification of eligibility. These sorts of terms are contemplated by proposed 707.3(b), requiring that the disclosures reflect the terms of the legal obligation between the member and the credit union. Given the definition of fixed-rate account in 707.2(n), credit unions offering fixed-rate accounts must contract to hold rates steady for at least a 30-day period. Retained sample disclosures for each type of account offered to members, such as account-opening disclosures, copies of advertisements, and change-in-term notices; and information regarding the dividend rates and annual percentage yields offered. 4. iii. For example, if a member deposits $8,000, the credit union pays 5.25% on only $2,500 and 5.50% on $5,500 (the difference between $8,000 and the first tier cutoff of $2,500). Rollover term share accounts. [58 FR 50445, Sept. 27, 1993, as amended at 61 FR 114, Jan. 3, 1996; 63 FR 71574, Dec. 29, 1998; 66 FR 33163, June 21, 2001; 74 FR 36104, July 22, 2009]. The term penalty may, but need not, be used to describe the loss that may be incurred by members for early withdrawal of funds from term share accounts. After the account is opened, you may not make deposits into the account until the maturity date stated on the certificate. 95-0318 / March 1995. A requirement to maintain a minimum balance to earn dividends does not make an account a tiered-rate account. ii. v. Accounts not covered by the periodic statement disclosure requirements (passbook and term share accounts) may disclose any information on the statement related to such accounts, so long as such information is accurate and not misleading. Section 707.9Enforcement and Record Retention. D. Resolved, that if the required transfers to reserves have been made and there are sufficient and available prior and/or current earnings available at the end of a dividend period, the officers of the Credit Union are authorized to pay dividends at the rate prospectively established by the Board of Directors for each account for the dividend period. Explore guides to help you plan for big financial goals, Supplement I to Part 1030 - Official Interpretations. (t) Potential member means a natural person within the credit union's field of membership (or an unincorporated nonbusiness association of such persons) or otherwise eligible to become a member as defined in paragraph (q) of this section. The par value of a share in this credit union is $________. (4) Exception for indoor signs. It should be noted that only in sections B6 through B10 of this appendix have specific examples of disclosures been given, with dates and figures. Such prospective rates and yields must be estimated in good faith, and must be declared at the proper time if it is at all possible to do so. Truth in Lending Act (Regulation Z) | NCUA (b) Permissible rates. Account drawn below par value of a share. If a credit union offers a $1,000 two-year term share account that does not compound and that pays out dividends semi-annually by check or transfer at a 6.00% dividend rate, the annual percentage yield may be disclosed as 6.00%. Adverse changes to terms such as the lowering of the dividend rate, annual percentage yield, or reducing the compounding or crediting frequency for funds remaining in shares or on deposit. 4. Ledger balance means the record of the balance in a member's account, as per the credit union's records. Balance is the average daily balance in the account for the period. (ii) Early withdrawal penalties. A credit union offers $25 to a member with only a regular share account to open a share draft account. Reg. (b)(1) Maturities of Longer Than One Year. A credit union offers $25 to a member if the member can locate his name in the body of a newsletter. 2. For this account type, the dividend period is quarterly, for example, the beginning date of the first dividend period of the calendar year is January 1 and the ending date of such dividend period is March 31. Thus, the disclosures outlined above will be made in addition to either: (i) Disclosure of the period the fixed-rates are in effect or (ii) the variable-rate disclosures. Dividends Compounded [Annually, Semiannually, Quarterly, Monthly, Weekly, Daily]. For a tiered-rate account, it also provides the upper and lower dollar amounts of the tier corresponding to the advertised annual percentage yield. The most common dividend periods are weekly, monthly, quarterly, semi-annually, and annually. A credit union can pay dividends each day on the account and still make uniform dividend payments. It is sufficient for a credit union to state that the fee applies to overdrafts created by check, in-person withdrawal, ATM withdrawal, or other electronic means. Disclosing a fee for overdraft items would not be sufficient. 1. Additional balance. g. Excessive share withdrawals $1.00 per item. "Published Edition". (iii) Withdrawal of dividends prior to maturity. (A specific example must also be given, see appendix B, B1(c).) For noncompounding term share accounts with a stated maturity greater than one year that do not compound dividends on an annual or more frequent basis, that require dividend payouts at least annually, and that disclose an APY determined in accordance with section E of appendix A of this part, a statement that dividends cannot remain on account and that payout of dividends is mandatory. The par value of a regular share in this Credit Union is $5. But a credit union could offer a minimum balance to earn dividends that includes an additional method that is unequivocally beneficial to the member such as the following: i. If you exceed the transfer limitations set forth above in any statement period, your account will be subject to closure by the credit union or to a fee of $1.00 per item. 2236. Do the account disclosures state how the minimum balance requirement is determined for these purposes (except for the balance to open the account)? The term also includes natural person nonmembers eligible to hold accounts in a credit union pursuant to relevant federal or state law. It is noted that other information can also be requested on the signature card, as long as it is in accordance with federal and state laws. Examples of early withdrawal penalties are: i. 5. Third tier. [For purposes of this disclosure, this is a rate and APY that were offered within the most recent seven calendar days and were accurate as of (date). State law controls the nature of accounts (i.e., whether an account is a share account or a deposit account). (c) When additional disclosures are required. 1. Any limitations on the number or dollar amount of withdrawals or deposits. We recommend you directly contact the agency associated with the content in question. If a credit union discloses additional account balances that include additional amounts that the credit union may provide to cover an item when there are insufficient or unavailable funds in the members account, does the credit union: Prominently state that any such balance includes these additional funds? 7. Dividend period more frequent than statement period. Credit unions offering club accounts (such as a holiday or vacation club accounts) cannot impose a minimum balance requirement for dividends based on the total number or dollar amount of payments required under the club plan.