‘Fixed’ rates on open-end loans

What you need to know about disclosures and advertisements.

Has your credit union advertised or disclosed rates on open-end loans as “fixed” without specifying a time period that the rate will be fixed?

If so, you’ll likely have to maintain that fixed rate until the account is closed either by the member or by the credit union.

In February 2010, the Federal Reserve Board issued a Regulation Z final rule that amended the general disclosure requirements for certain open-end loans and the advertising requirements for all open-end loans (Reg Z Sections 1026.5 and 1026.16, respectively).

The Fed adopted the two amendments to restrict the use of the term “fixed” (or any similar term to describe a rate disclosed in tabular disclosures provided with account-opening documents and in advertisements) for open-end loans to instances when the rate would not increase until the expiration of a specified time period.


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