§ 227.26 - Unfair charging of security deposits and fees for the issuance or availability of credit to consumer credit card accounts.

(a) Limitation for first year. During the first year, a bank must not charge to a consumer credit card account security deposits and fees for the issuance or availability of credit that in total constitute a majority of the initial credit limit for the account.

(b) Limitations for first billing cycle and subsequent billing cycles. (1) First billing cycle. During the first billing cycle, the bank must not charge to a consumer credit card account security deposits and fees for the issuance or availability of credit that in total constitute more than 25 percent of the initial credit limit for the account.

(2) Subsequent billing cycles. Any additional security deposits and fees for the issuance or availability of credit permitted by paragraph (a) of this section must be charged to the account in equal portions in no fewer than the five billing cycles immediately following the first billing cycle.

(c) Evasion prohibited. A bank must not evade the requirements of this section by providing the consumer with additional credit to fund the payment of security deposits and fees for the issuance or availability of credit that exceed the total amounts permitted by paragraphs (a) and (b) of this section.

(d) Definitions. For purposes of this section, the following definitions apply:

(1) “Fees for the issuance or availability of credit” means:

(i) Any annual or other periodic fee that may be imposed for the issuance or availability of a consumer credit card account, including any fee based on account activity or inactivity; and

(ii) Any non-periodic fee that relates to opening an account.

(2) “First billing cycle” means the first billing cycle after a consumer credit card account is opened.

(3) “First year” means the period beginning with the date on which a consumer credit card account is opened and ending twelve months from that date.

(4) “Initial credit limit” means the credit limit in effect when a consumer credit card account is opened.