The Initial Disclosure - What Must it Contain?
The disclosure must contain the following six elements, to the extent each element applies to or is present in your funds availability policy.
First, you must give a summary of your funds availability policy. [12 CFR 229.16(b)(1)]
Second, any categories of deposit for which you delay availability must be described and the time period of delay stated (including a description of your business days and when a deposit is considered received). [12 CFR 229.16.(b)(2)]
Third, if you are reserving the right to rely on any “safeguard exceptions” in order to delay availability beyond the Regulation’s maximum time frames, you must describe the exceptions, state what the availability will be when they arise, and state that you will notify the customer if you invoke one of the exceptions. [12 CFR 229.16.(b)(3)]
Fourth, if you are reserving the right to delay availability beyond your normal policy time frames on a “case-by-case” basis, you must (a) describe that option in your disclosure, (b) state the availability time period should you exercise that option, (c) state that you will notify the customer if you make such a delay, and (d) include a statement that the customer should ask if he or she needs to be sure about the availability of a particular deposit. [12 CFR 229.16.(b)(3) and (c)(1)(iii)] Fifth, if your funds availability policy treats deposits made at nonproprietary ATMs differently from those made at proprietary ATMs, you must instruct the depositor as to how to distinguish a nonproprietary ATM from a proprietary ATM and describe when deposits will be available. [12 CFR 229.16.(b)(5)]
And finally, if you are a credit union, you are required to disclose your interest-payment policy on transaction accounts if your policy will be to begin paying interest on a deposit at a time later than when you receive credit for the funds. [12 CFR 229.16.(d)] This disclosure requirement only applies to credit unions.
Throughout our discussion of these six elements, we will be quoting provisions from model forms supplied by Regulation CC. We recommend that when you are deciding on what should be in your disclosure, you study the model forms. If you use them properly, you are deemed to be in compliance with the disclosure requirements of the Regulation. [12 CFR 229, Appendix C] However, remember that your disclosure must reflect your actual funds availability policy. If the language in a model form does not reflect your actual policy, or the most recent Regulation CC requirements, then using the model language will not protect you. In short, use the model forms to the extent you can, but don’t be afraid to deviate from that language to accurately describe your policy.
Now let’s look more closely at each of these six elements.
Summary of Your Policy
First, the summary of your funds availability policy. This is required because the Federal Reserve Board anticipated that many institutions would have rather complicated disclosures reflecting complicated policies. The Board felt that a brief summary of the policy at the beginning of the disclosure would be helpful to the customer. Many institutions have an availability policy of making all deposits available on the first business day after the day of deposit. For these institutions, the brief summary is actually a statement of their entire general policy, and might read something like this: “Our policy is to make funds from your cash and check deposits available to you on the first business day after the day we receive your deposit. Electronic direct deposits will be available on the day we receive the deposit. Once they are available, you can withdraw the funds in cash and we will use the funds to pay checks that you have written.” (Taken from model Form C-3, Appendix C, Regulation CC.)
For other institutions, which delay availability on a variety of types of checks beyond the first business day after the day of deposit, the summary of the policy would read something like this: “Our policy is to delay the availability of funds from your cash and check deposits. During the delay, you may not withdraw the funds in cash and we will not use the funds to pay checks that you have written.” (Taken from model Form C-1, Appendix C, Regulation CC.)
Categories of Deposits for Which You Delay Availability
The second requirement is that you describe any categories of deposit for which you delay availability and state in what time periods those deposits will be available, including a description of your business days and when a deposit is considered received. [12 CFR 229.16(b)(2)] For institutions whose policy is to make all deposits available on the first business day after the day of deposit, this requirement has minimal effects. Since these institutions have already disclosed, under the first requirement, that all deposits (other than electronic direct deposits) will be available on the first day after the day of deposit, all these institutions need to do under this second requirement is to describe their business days and explain when a deposit is considered received. For example, such an institution could meet this requirement by saying simply: “For determining the availability of your deposits, every day is a business day, except Saturdays, Sundays, and federal holidays. If you make a deposit before [time of day] on a business day that we are open, we will consider that day to be the day of your deposit. However, if you make a deposit after [time of day] or on a day we are not open, we will consider that the deposit was made on the next business day we are open.” (Taken from model Form C-3, Appendix C, Regulation CC.)
Institutions that do treat different types of deposits differently in their general policy will have to go into much more detail to meet this second requirement. Their tasks are: (1) to enable the customer to look at a check and determine the category in which it fits; (2) to state when each category of deposit will be available for withdrawal; and (3) to describe their business days and when a deposit is considered received.[Commentary, §229.16(b)] For example, institutions who make local checks available on the second business day after the day of deposit would have to first describe all the sorts of deposits which are mandatory next-day availability (U.S. Treasury checks, wire transfers, “on us” checks, etc.—see Part II for a complete list), then describe what local are so that a customer could tell, by looking at a check, whether it was local, and then state what the availability time frames of local checks are, including the description of business days and when a deposit is considered received.
Other institutions might make other distinctions, such as between in-state and out-of-state checks. The disclosure for this type of policy would have to instruct the depositor to look for the name and location of the drawee bank on the check to determine whether the check is in-state or not. All sorts of other categories might be used by institutions in their funds availability policies; the important thing to remember is that the categories have to be described in such a way that the depositor can look at a check and determine the category in which it fits, and the disclosure must state when each category will be available for withdrawal.
No matter what your funds availability policy is, you may have to show some deposits as having “same-day” availability. Regulation CC requires that certain types of deposits be made available no later than the first business day after the day of deposit. (A complete list and description of these appears in our chapter in Part II of this manual dealing with ongoing duties under Regulation CC.) Among these mandatory next-day deposits are “electronic payments,” or direct deposits. Although Regulation CC requires these to be available for withdrawal on the next business day, other regulations require certain types of these direct deposits to be available on the same day as the payment. In particular, Treasury regulations require that direct deposits of government payroll and benefit funds be available on the same day as the payment. And ACH association rules encourage same-day availability for direct deposit payroll funds. When Regulation CC was originally issued in May 1988, the model forms in the Regulation simply listed all electronic payments as having next-day availability, although the Commentary to the Regulation acknowledged the Treasury regulations and stated that Regulation CC did not preempt those Treasury regulations, that same-day availability was still required for those types of deposits. This meant that the model forms were misstating the availability of those deposits.
The Board cleared up the matter in April 1989 by amending the Commentary to say that anyone relying on the model forms in disclosing these deposits as having next-day availability would be protected from civil liability for incorrect disclosure. But the Board encouraged institutions to correct their disclosure forms when they reordered. In May of 1990, the Board changed the model forms to reflect same-day availability for these deposits. Consequently, you should take this into account when designing your disclosure, and make sure that these deposits are listed as having same-day availability.
Also be aware that disclosing the maximum availability time frames that are required by Regulation CC for other types of checks is proper only if those time frames reflect your actual policy. The rule is that you must disclose the actual availability of most checks you handle in a given category. [12 CFR 229.16(a)] For example, if you make most local checks you handle available on the first business day after the day of deposit, it would be improper to say in your initial disclosure that local checks will be available on the second business day, even though you are allowed to restrict availability on local checks until the second business day.
And, again, the disclosure must include a description of your business days and when a deposit is considered received so that the time periods you disclose for each category are actually useful to the depositor. [12 CFR 229.16(b)(2)] Language to meet this requirement, for an institution that generally delays availability of certain categories of deposit, might read like this: “The length of the delay is counted in business days from the day of your deposit. Every day is a business day except Saturdays, Sundays, and federal holidays. If you make a deposit before [time of day] on a business day that we are open, we will consider that day to be the day of your deposit. However, if you make a deposit after [time of day] or on a day we are not open, we will consider that the deposit was made on the next business day we are open.” (Taken from model Form C-4, Appendix C, Regulation CC.)
Notice the “[time of day]” in this quote and the earlier quote used in next-day availability policies. This is a reference to the cut-off time and is a required disclosure for institutions which have cut-off times. As we read the Regulation, a cut-off time is a time after which deposits are considered made on the next banking day and after which the institution remains open for business. It is different from a closing time in that, obviously, the institution is not open after closing time. We feel that only cut-off times, not closing times, need to be disclosed. (This is confirmed in the Commentary to Section 16(b)(6)). Cut-off times are what present the possibility of confusion for the depositor as to the day on which a deposit is considered made in that he or she makes a post-cut-off-time deposit during normal business hours, yet the deposit will not be considered made until the next day. Closing times do not present such a problem since a depositor would not presume that a deposit would be considered made until the next day when it is made after closing time. If you do not have a cut-off time, then you can alter the model language to delete the reference to “[time of day].”
The Regulation has a number of rules about cut-off times that you should know. First, your cut-off time cannot be any earlier than 2 p.m. local time, except for deposits made at ATMs, contractual branches, and other off-premise facilities for which the cut-off time can be as early as 12 noon. [12 CFR 229.19(a)(5)(ii)] However, even though you cannot have a cut-off time earlier than 2 p.m., you are not required to stay open until then. You can close any time you want. You can also consider your institution closed at a certain time even if you remain open after that time for limited functions (such as only keeping a drive-up window open). (See the Regulation CC chapter in Part II of this manual for more details on what constitutes a “banking day.”) Second, in disclosing your cut-off time on your funds availability disclosure, you are permitted, if you have different cut-off times for different locations, to disclose the earliest of those times along with a statement that cut-off times vary at different locations. You need not list all the different cut-off times. [Commentary, §229.19(a)] And third, you can have different cut-off times for different types of deposits or even deposits made at different teller stations within the same branch so long as the cut-off times are not earlier than 2 p.m. or 12 noon, as appropriate. [Commentary, §229.19(a)-6b]
Within the context of this second disclosure element, that you disclose different categories of deposits for which you delay availability, there are a number of additional considerations which will affect the language in your initial disclosure.
$400 [Per Final Rule, $450 effective 7/1/20] Cash-Withdrawal Rule
Another possible bit of language that you may have to add to your disclosure is language describing the “$400 [$450 effective 7/1/20] cash-withdrawal rule.” This rule says that you can extend for one business day availability of local checks for purposes of cash withdrawals. But $400 [$450 effective 7/1/20] of a deposit of local checks must be available for cash withdrawal by 5 p.m. on the normal availability day, namely, the second business day. [12 CFR 229.12(d)] So, for example, if John Doe deposits a local check on Monday, you normally have to make the funds available by Wednesday, the second business day after the banking day of deposit. But this rule says that you can restrict John from withdrawing more than $400 [$450 effective 7/1/20] in cash on Wednesday and make the rest of the deposit available for cash withdrawal on Thursday. For withdrawal by any other means, such as for the payment of a check, the funds must be available in their entirety by Wednesday.
If your funds availability policy takes advantage of this rule, then your initial disclosure must make reference to it. The model forms from the Regulation accomplish this by building it into the description of the availability of local checks and by giving examples showing its operation. You should look to model Form C-10, Appendix C to Regulation CC, for guidance.
Many institutions whose policies distinguish local checks do not take advantage of this rule simply because it is too complicated and too difficult to implement. These institutions, of course, do not have to include any language in their disclosures referring to the rule.
Holds on Other Funds
Your disclosure should also explain the “holds on other funds” rule if your funds availability policy will take advantage of this rule. The “holds on other funds” rule has two elements: First, it allows you to place a hold on funds already available in the customer’s transaction account if you cash a check for the customer. And second, if the customer deposits a check into a transaction account and you make the funds from that check available more quickly than you normally would under your policy, you can place a hold on funds in another account (either a transaction or nontransaction account). The hold that you impose in either circumstance cannot be for a larger amount than the amount of the check and cannot be longer than your normal availability time frames, unless you invoke a safeguard exception or a case-by-case exception (discussed below). [12 CFR 229.19(e)]
The Regulation provides model language for both elements of the rule, and you would have to include both paragraphs if you wanted to take advantage of them.
- C-6—Holds on Other Funds (Check Cashing)
- C-7—Holds on Other Funds (Other Account)
Putting these paragraphs in your disclosure preserves your right to do the things the paragraphs describe (although even if you did not include the paragraphs, you could still place a hold on a nontransaction account when you cash a check for a depositor, since there has been no deposit of a check to a transaction account in that circumstance and, therefore, Regulation CC does not apply at all). While there doesn’t appear to be any harm in including these paragraphs in your disclosure, we question the advisability of relying on them too much, especially where you are cashing a check. It seems a little deceptive and unfair to the customer to purchase a check for cash and not do anything that would make the transaction appear to be a deposit and a corresponding withdrawal of available funds and, then, after the customer has left, put a hold on other funds which had previously been available for withdrawal. A depositor could reasonably conclude when you cash a check instead of requiring him or her to deposit the check and withdraw available funds that you have decided to make available the funds represented by the check and that you will not be restricting availability on any funds in connection with the transaction. If you had wanted to restrict availability, the customer might think you would not have cashed the check but would have had him or her deposit it and withdraw other funds.
You should also be aware that if you cash an “on us” check, the “holds on other funds” rule does not apply at all. Cashing an “on us” check is considered final payment of the check under the UCC, which means that you have irrevocably agreed to pay the check and putting a hold on other funds would be contradictory to that agreement.
In short, we think you can accomplish the ends to which these paragraphs are pointed simply by treating these transactions as deposits of the checks and withdrawals of available funds. That way, you do not have to rely on these paragraphs and risk problems with disappointed customers who get confused as to the extent of available funds in their accounts.
Special Deposit Slips
As we will learn in the Part II - Ongoing Responsibilities section, there are a number of types of deposits for which you must provide next-day availability. These include such things as cash, electronic transfers, U.S. Treasury checks, Federal Reserve Bank and Federal Home Loan Bank checks, checks drawn by state or local government units and cashier’s, certified and teller’s checks. As a condition to next-day availability for state and local government checks and cashier’s, certified and teller’s checks, you can require that your depositor use a special deposit slip when depositing such a check. [12 CFR 229.10(c)(3)] The special deposit slip would identify the check as a next-day item. You could either have a slip specially designed for that purpose, or you could simply require that an ordinary deposit slip be filled out in a special way. Whatever form the special deposit slip takes, you can, if you choose to, require that your depositors use them when depositing state and local government checks and cashier’s, certified and teller’s checks. The consequence of a customer not using it is that the item will not be subject to next-day availability.
Should you decide to require use of a special deposit slip, your initial disclosure must state that fact. Since you are required to provide the special deposit slips, your initial disclosure must also tell the depositor where they are available (e.g., “…on our lobby tables” or “…from any teller,” etc.). Generally speaking, the institutions which require special deposit slips are those which delay availability of certain categories of deposits beyond the next business day. A disclosure form for such an institution would have to list the types of deposits for which next-day availability is mandatory, and the reference to the special deposit slip requirement would appear with the listing of state and local government checks and cashier’s, certified, and teller’s checks.
Availability Based on Your Receipt of Credit
Some institutions have funds availability policies in which deposits are made available at the same time the institution itself receives credit for the check. For example, if a bank sends all out-of-town checks to a Federal Reserve Bank for collection, the bank would make the funds from those checks available to its customers at the same time the bank received credit for the checks from the Federal Reserve Bank. These time frames are generally well inside the maximum availability time frames under Regulation CC, so there is no compliance problem from the standpoint of making funds available quickly enough. But these policies do present something of a disclosure problem, since checks available on a particular day after the day of deposit in such a policy do not fall into a neat category and, therefore, cannot easily be described. For example, an institution might receive credit for local checks on either the first or second day after the day of deposit, but exactly which local checks are available on the first day and which are available on the second day can only be determined by looking at a long schedule of routing numbers and credit time frames. The checks available on the first day do not necessarily have anything in common with each other that distinguishes them from those available on the second day, and because of this, it is hard to describe in words which checks will be available on either day. Furthermore, the schedule of routing numbers and credit time frames is much too long to put in a disclosure.
When Regulation CC was first issued, this was simply an unresolved problem. It appeared that the only way an institution with such a policy could be certain of complying with the Regulation was to give every new account holder the long schedule of routing numbers and time frames. However, in an update to the Commentary to Regulation CC, the Board gave these institutions some flexibility in describing their policies. The Commentary now says that such a policy can be disclosed by first describing the mandatory next-day availability deposits (U.S. Treasury checks, wire transfers, “on-us” checks, etc.—see Part II for a complete list), then describing more general categories of checks and stating the range of availability time frames that apply to each category. For example, according to the Commentary, you could “…disclose the four-digit Federal Reserve routing symbol for local checks and indicate that such checks as well as certain nonlocal checks will be available for withdrawal on the first or second business day following the day of deposit, depending on the location of the particular bank on which the check is drawn, and disclose that funds from all other checks will be available on the second or third business day.” [Commentary, §229.16(b)-8] If you choose this option, the Commentary continues, you also have to disclose that the customer can request a copy of the detailed schedule which would enable the customer to determine the exact availability of a particular check. And, of course, you would have to supply the schedule if a customer asks for one.
Safeguard Exceptions
The third general disclosure requirement, after giving a brief summary of your policy and describing any categories of deposits for which you delay availability, is to disclose any of the “safeguard exceptions” which you reserve the right to invoke. [12 CFR 229.16(b)(3)] We will not go into any detail about the exceptions themselves here; we will do that in Part II of the manual in the chapter dealing with your ongoing responsibilities under Regulation CC. For our present purposes, you only need to know that you must describe in your disclosure form any of the safeguard exceptions that you plan to use at any time in the future. You also need to disclose what the availability time frame will be if you invoke one of the exceptions, and that you will notify the depositor in the event you invoke an exception. The model forms provide the following language for meeting this requirement:
- In addition, funds you deposit by check may be delayed for a
longer period under the following circumstances:
- We believe a check you deposit will not be paid.
- You deposit checks totaling more than $5,000* on any one day.
- You redeposit a check that has been returned unpaid.
- You have overdrawn your account repeatedly in the last six months.
- There is an emergency, such as failure of communications or computer equipment.
In addition to the five safeguard exceptions referred to in this model language is the “new account” safeguard exception. If your policy will be taking advantage of this exception, you need to disclose that, and here is the model language:
- If you are a new customer, the following special rules will apply during the first 30 days your account is open.
Of course, if you choose not to retain the ability to invoke one of these safeguard exceptions, you need not mention it in your disclosure. For example, if new accounts will be subject to the same availability time frames as existing accounts under your policy, you need not say anything about new accounts.
The “[number]” that appears in the last sentence of both sections of the model language is asking you to insert the time frame in which checks subject to the safeguard exceptions will generally be made available. When the new account exception applies, there is no time limit on when you must make funds available, except for the mandatory next-day availability items. So you can fill in any number you want in that sentence. (See the discussion below as to the advisability of changing this last sentence to read that funds will be available “no later than” a particular business day rather than “on” a particular business day.)
In the model language dealing with the other safeguard exceptions, you might want to insert the word “seventh” in the last sentence. We suggest “seventh” because local checks must be made available by the second business day after the day of deposit, and the Regulation allows you to delay availability beyond the normal deadline for a “reasonable” period of time when you invoke a safeguard exception. The Regulation deems five business days to be a reasonable period of time for the extension of local checks. [12 CFR 229.13(h)(4)] Therefore, it makes sense to say that when a safeguard exception applies, the check will generally be available no later than the second business day (local-check time frame) plus five business days (the regulatory “reasonable” extension), or the seventh business day.
Notice that the model language describing the new accounts exception says that the excess over $5,000* of deposits of most of the mandatory “next-day-availability” checks will be available on the ninth business day after the day of deposit. The ninth business day is the latest time you can make that excess available. Many institutions will make it available sooner than that, and if you are one of them, you should change the model language to reflect your policy. We have been asked many times whether it is permissible to say that the excess will be available “no later than” the ninth business day rather than “on” the ninth business day. Unfortunately, no clear authority exists to justify deviating from the model language in that way. On the one hand, the Regulation does not seem to be very strict as to how to disclose the availability time frame applicable when safeguard exceptions apply. (“…disclosure shall contain…a description of any of the exceptions in § 229.13 that may be invoked by the bank, including the time following a deposit that funds GENERALLY will be available for withdrawal…”) [Section 229.16(b)(emphasis added)] And the model forms themselves, when describing availability when other safeguard exceptions are invoked, say, “They will generally be available NO LATER THAN the [number] business day after the day of your deposit” (emphasis added).
On the other hand, if your disclosure tells a new customer that his or her deposit will be available no later than the ninth business day, how informative have you really been? With that phrasing, the depositor cannot rely on availability any earlier than the ninth business day, anyway. Secondly, a new customer making a deposit will not be receiving, at the time of the deposit, a notice of delayed availability as would a customer whose deposit is being delayed under some other safeguard exception. This notice specifies when a delayed deposit will be available, and since a new customer will not be receiving such a notice, maybe the initial disclosure should be more specific about the availability of deposits to new accounts.
Until the Board deals with this issue, we have to leave it to your best judgment.
Case-by-Case Exceptions
The fourth disclosure requirement has to do with reserving the right to make exceptions to your funds availability policy on a case-by-case basis. Any institution whose policy is to make funds available more quickly than required by the Regulation can make an exception to its normal policy on a case-by-case basis and delay availability up to the required availability time frame. [12 CFR 229.16(c)(1)] You can make this sort of exception for any reason at all, or for no reason at all. You are not limited to the circumstances which make up the “safeguard exceptions.” However, in order to have this case-by-case exception authority, you must include some additional language in your initial disclosure. (And, as with the safeguard exceptions, you will have to give the depositor a notice when you actually make such an exception.)
Your initial disclosure must explain that you can make these case-by-case exceptions, it must state that you will notify the depositor if you do, and it must show the general time frame in which deposits will be available when you make such an exception. You must also include a statement telling the depositor that he or she should ask if he or she needs to be sure about when a particular deposit will be available for withdrawal. The model forms use the following language:
-
In some cases, we will not make all of the funds that you deposit by check available to you on the first business day after the day of your deposit. Depending on the type of check that you deposit, funds may not be available until the fifth business day after the day of your deposit. The first $100 of your deposits, however, may be available on the first business day.
If we are not going to make all funds from your deposit available on the first business day, we will notify you at the time you make your deposit. We will also tell you when the funds will be available. If your deposit is not made directly to one of our employees, or if we decide to take this action after you have left the premises, we will mail you the notice by the day after we receive your deposit.
If you will need the funds from a deposit right away, you should ask us when the funds will be available. (Taken from model form C-3, Appendix C, Regulation CC.)
Notice that this model language says that the funds may not be available until the fifth business day after the day of deposit. The fifth business day after the day of deposit is when nonlocal checks must be made available under the permanent schedule of Regulation CC. Under the case-by-case exception authority, an institution can delay availability of a deposit beyond its normal availability but not beyond the maximum time frame under the Regulation, or the second business day for local checks and the fifth business day for nonlocal checks. (If a “safeguard exception” is invoked, the delay can extend a reasonable period beyond the regulatory maximum.) The model language is referring to the fact that the longest delay that could be imposed under the case-by-case authority is until the fifth business day.
How to Distinguish Proprietary ATMs from Nonproprietary ATMs
The fifth disclosure requirement is that you instruct the depositor how to distinguish a nonproprietary ATM from a proprietary ATM if your funds availability policy treats deposits made at one differently from deposits made at the other. [12 CFR 229.16(b)(5)] You have a number of options in accomplishing this. First, you could include in your disclosure a list of the locations of all nonproprietary ATMs at which depositors can make deposits to their accounts with you. Second, you could include a list of the locations of your proprietary ATMs. Or third, you could include a statement to the effect that all your proprietary ATMs are labeled as your machines (and, of course, they would have to be so labeled).
Remember that this disclosure requirement only applies if your policy treats deposits made at nonproprietary ATMs differently from those made at proprietary ATMs. This requirement will not apply to all institutions. For instance, those institutions which do not offer any ATM services to their customers do not need to make this disclosure. Or, if an institution’s policy is to make deposits made at all ATMs, whether proprietary or not, available in the same time frames as deposits made at staffed facilities, this disclosure requirement would not apply. This is because the depositor would have no need to distinguish proprietary ATMs from nonproprietary ones. In the same sense, an institution which has no proprietary ATMs, but which is involved in an ATM network which allows its customers to make deposits at nonproprietary ATMs, need not make this disclosure because any ATM at which a depositor can make a deposit is a non-proprietary one. Such an institution may well have a paragraph in its disclosure spelling out a separate availability time frame for deposits made at nonproprietary ATMs (pursuant to the second disclosure requirement discussed previously), but the institution is not required to give any instructions as to how to distinguish proprietary from nonproprietary ATMs.
Delayed Accrual of Interest or Dividends (Credit Unions Only)
The final disclosure requirement applies only to credit unions. It is related to the general rule in Regulation CC that institutions begin accruing interest on deposits to transaction accounts no later than the time the institution itself receives credit for the funds. The Regulation makes an exception to that rule for credit unions. The exception says that a credit union can have a policy of beginning the accrual of interest (or dividends) later than the time it receives credit for the funds so long as the credit union’s policy applies to all deposits, including deposits of cash, and so long as the credit union discloses its policy in its initial funds availability disclosure. [12 CFR 229.16(d)] So if you are a credit union and you are taking advantage of this exception, you must include an explanation of your transaction account interest-payment policy in your disclosure.
The Regulation includes some model language for this disclosure, but, as you can see, the model language assumes some features which may or may not be consistent with your interest-payment policy:
- C-11—Credit Union Interest-Payment Policy
Your policy may differ from that described in the model language in a number of ways. For instance, you may not use the tenth day of the month as the “rollback” date; you may use some other day. Or you may operate a similar interest-payment policy but on a quarterly basis rather than a monthly basis. Whatever your policy is, you must make sure that your disclosure accurately reflects it. Do not be afraid to deviate from the model language if necessary.
The rules we have described in this section are the same whether your customers earn interest or dividends on their accounts. If you pay dividends rather than interest, your policy statement in your disclosure should, of course, refer to dividends rather than interest.