My bank is advertising a credit product that can only be secured by a certificate of deposit at the bank.
In the footnote in the credit product advertisement, the bank lists the annual percentage yield for the CD that will secure the loan.
Q Does listing the APY only in the footnotes of the advertisement trigger disclosure of the additional items required when an APY is included in an advertisement? Also, since it is the footnotes, may the bank list the interest rate for the CD without listing the APY? Finally, does APY still need to be spelled out, “annual percentage yield”?
A First, unless the advertisement is exempt from the rules as provided under §1030.8(e) of Regulation DD (Truth in Savings Act), even if the APY is in a footnote of the advertisement, it must comply with requirements to include certain items (e.g., minimum balance requirements, effect of fees, early withdrawal penalties) if the advertisement mentions an APY. The location of the APY in the advertisement is irrelevant.
Second, if the advertisement mentions an interest rate it must include the APY.
Finally, if including an APY, the APY must be clearly stated as “annual percentage yield” at least once in the advertisement.
For more information, contact ABA’s Leslie Callaway. Please note that this section is not a substitute for professional legal advice.
