Interpretation of Regulation Z simplifying procedures for credit card issuers which bill customers in full on a transaction-by-transaction basis and impose no finance charges

E # E R V E I .i.w .j !. J ULL-UiU/o o! 2 J 19/7 August- 17, 1977 The Board of Governors of the Federal Reserve System has approved an interpretation of Regulation Z (Truth in Lending) simplifying procedures for credit card issuers which bill customers in full on a transaction-bytransaction basis and impose no finance charges. Most credit cards extend open-end credit, such as the credit available with a bank credit card, or a department store card, and customers are billed, usually monthly, for their purchases. A debt balance may be left after the customer makes a payment. Certain credit card issuers, however, such as some automobile rental companies, require payment in full for each transaction, and send bills only when there has been a transaction. No finance charges are imposed.

The interpretation permits such credit card issuers to continue sending bills to their customers only when a transaction has occurred. The interpretation also requires such card issuers to conform only to provisions of Regulation Z that are clearly consistent with their type of billing. The text of the Board's interpretation is attached. - 0 - F e d e r a l R 'HAL re^ For immediate release