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What Is Regulation DD?
Let me explain Regulation DD directly to you: it's a directive from the Federal Reserve that puts into action the Truth in Savings Act, or TISA, which Congress passed in 1991. This regulation requires lenders to give you uniform details on fees and interest when you open an account. By doing this, Regulation DD and TISA enable you to make smarter choices about accounts at financial institutions.
Understanding Regulation DD
Regulation DD targets accounts you open as an individual, not those for corporations or organizations, and it's all about protecting and empowering you as a banking customer. It helps you decide intelligently where to put your money. This applies to depository institutions, but not credit unions. You'll get disclosures from institutions at key times, like when you first open an account.
The regulation covers accounts such as savings, checking, money market, certificates of deposit (CDs), variable-rate accounts, and even those in foreign currencies. Under Regulation DD, financial institutions must tell you about annual percentage yield, interest rates, minimum balance requirements, account opening details, and fee schedules. You receive these disclosures when the account opens, when you ask for them, when terms change, or when the account matures.
Regulation DD and the Truth in Savings Act (TISA)
As I mentioned, Regulation DD carries out TISA, which was part of the 1991 FDIC Improvement Act. TISA aimed to foster healthy competition among institutions and build economic stability. It pushes banks to be transparent about their policies, giving you more control over where you bank.
Remember, if state laws conflict with Regulation DD or TISA requirements, they're preempted to the extent of the inconsistency. You can request a preemption determination from the Consumer Financial Protection Bureau (CFPB).
Regulation DD Rules and Amendments
On the rules side, advertising guidelines apply to anyone promoting these accounts, including deposit brokers. Institutions can't advertise in ways that mislead you, provide inaccurate info, or misrepresent the deposit contract. For instance, they can't call interest 'profit'. If a broker advertises an account, the rules apply whether you or the broker hold it.
Amendments came in 2006 to ensure uniformity when accounts are overdrawn, and in 2010 to cover disclosures on periodic statements for overdraft and returned item fees, plus rules for balance info via automated systems. Disclosures must be clear, conspicuous, and in a form you can keep, like writing or electronic with your consent. They need to show if disclosures for multiple accounts are combined and must reflect the legal terms of your agreement with the institution.
Do Credit Unions Have to Comply With Regulation DD?
No, they don't. Regulation DD only covers accounts from depository institutions. Credit unions and non-banks are exempt.
When Does a Bank Have to Notify Me of Changes?
It varies. For changes that hurt you, like fee increases, the institution must give you at least 30 days' notice under Regulation DD. For changes that help you, such as lower fees, no notice is needed unless the change is temporary, in which case advance notice rules apply.
Does a Bank Have to Notify Me in Writing?
Yes, the institution must provide written disclosures that match the legal contract between you and them, in a form you can retain. This information has to be clear and conspicuous so you can easily understand the account terms.
The Bottom Line
In essence, Regulation DD protects you by making banks deliver transparent, upfront disclosures. This lets you compare terms across banks and choose the best spot for your account as a non-institutional consumer.
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