Truth in Savings Act: Disclosures, Interest, and Advertising Rules

The Truth in Savings Act is a 1991 federal law that requires banks and savings institutions to disclose interest rates, fees, and other deposit account terms in a standardized format, so you can compare one account against another without decoding each bank’s fine print.¹ The rules that carry it out live in Regulation DD, which spells out exactly what those disclosures must contain and how they must look.²

Which Accounts and Banks Are Covered

The Act applies to state-chartered and federally chartered banks and savings associations that hold consumer deposit accounts, with the Consumer Financial Protection Bureau overseeing compliance through Regulation DD at 12 CFR Part 1030.² Credit unions follow a parallel set of rules under the National Credit Union Administration at 12 CFR Part 707, so the protections you get at a credit union are substantively the same.³

The Act protects natural persons using accounts for personal, family, or household purposes. Savings accounts, checking accounts, money market accounts, and certificates of deposit opened for your own use are all covered.⁴

Some accounts fall outside. Business accounts, government accounts, and accounts held by organizations are not covered, because the Act’s definition of “consumer” is limited to natural persons acting for personal purposes. An account you hold in a professional capacity for someone else, such as a lawyer’s client trust account, is also outside the Act.⁴ Custodial accounts held by a parent under a Uniform Transfers to Minors Act arrangement and informal “Totten trust” or payable-on-death accounts are covered, but accounts established under a formal written trust agreement are generally exempt.⁵

What the Bank Must Tell You Before You Open an Account

A bank has to give you written disclosures before you open a covered deposit account, or immediately if you ask while shopping. If you’re not physically in the branch, the bank has to mail or deliver them within a reasonable time, and can send them electronically only if you agree.⁶

Those disclosures have to cover, at a minimum:

The annual percentage yield (APY) and the interest rate, including whether the rate is fixed or variable.
Any minimum balance needed to open the account, avoid fees, or earn the stated APY.
The amount and conditions for every fee that may be charged on the account, from monthly maintenance to stop-payment charges.
For a CD or other time account, the maturity date, the early withdrawal penalty, and how that penalty is calculated.

By the time you commit money, you should know what you’re getting.⁶

For tiered-rate accounts, where higher balances earn a higher rate, the bank must disclose the interest rate and APY for each balance level. For stepped-rate accounts, where a fixed schedule of rates applies over successive periods, the bank must disclose a single composite APY that blends the return across the full term, along with the rate for each period and how long it lasts.⁷

How Interest Has to Be Calculated and Reported

Every deposit account has to express its return as an annual percentage yield, which reflects both the interest rate and how often interest compounds over a 365-day period. That means an account compounding monthly and one compounding daily can be compared using a single number.⁷

For the balance that earns interest, a bank may use only the daily balance method or the average daily balance method, applying at least a daily rate of 1/365 of the interest rate (1/366 in a leap year). Both approaches pay interest on the full principal in the account each day.⁸ That rule ended a once-common “low balance” practice, under which some banks paid interest only on the lowest balance reached during a statement cycle. A deposit of $10,000 on the first of the month that briefly dipped to $500 mid-cycle would earn interest as if only $500 had sat there the whole time.

Interest on non-cash deposits like checks has to start accruing no later than the business day specified under the Expedited Funds Availability Act, and it keeps accruing until the day you withdraw the funds.⁷ A bank cannot sit on your check for a week and start the interest clock late.

Advertising Rules That Protect You While Shopping

If an ad mentions a specific APY, several disclosures have to appear clearly and conspicuously alongside it: whether the rate is variable, the period during which the APY is available, the minimum balance required to earn the advertised rate, the minimum deposit needed to open the account if higher than the balance for the yield, a statement that fees could reduce earnings, and for CDs, the term and a note about early withdrawal penalties.⁹ The same list appears in the statute itself.¹⁰

The “Free” Account Rule

An advertisement cannot describe an account as “free” or “no cost” if any maintenance or activity fee may be imposed on it. This is a bright-line rule: even a $2 monthly service charge that only kicks in when your balance drops below a threshold disqualifies the account from being marketed as free. Regulation DD also prohibits using the word “profit” to describe interest earned on a deposit account.⁹

Bonuses and Promotional Incentives

A “bonus” under Regulation DD is any premium, gift, or cash incentive worth more than $10 offered for opening, maintaining, or increasing a deposit balance. When a bank offers a qualifying bonus, the account disclosures have to state the bonus amount, when it will be paid, and any minimum balance or time requirements to earn it.⁷ If the bonus appears in an ad, the ad has to include the APY, the time and balance requirements to earn the bonus, and the minimum opening deposit if it exceeds the qualifying balance. A “Get $300!” billboard cannot quietly rest on a requirement to park $15,000 for 90 days.

Signs posted inside a bank branch are exempt from most of the triggered-disclosure requirements. But if an indoor sign mentions a rate of return, it has to state that rate as an APY, cannot display any other rate alongside it (except the interest rate tied to that APY), and must direct customers to ask an employee for full details on fees and terms.⁹

Statements and Advance Notice After the Account Is Open

Once the account is open, the bank has to send periodic statements showing the APY earned during the statement period, the dollar amount of interest credited, and an itemized list of every fee charged. Fees of the same type can be grouped together with a total dollar amount rather than listed one by one.¹¹

Each periodic statement also has to separately disclose the total dollar amount of overdraft fees charged for paying items when the account lacked sufficient funds, and the total charged for returning items unpaid. Both figures appear for the current statement period and as a running year-to-date total.¹² Over the course of a year those running totals make the cumulative cost hard to miss.

If a bank wants to lower your APY, raise a fee, or make any other change that adversely affects you, it has to mail or deliver written notice at least 30 calendar days before the change takes effect.⁷ That window gives you time to move your money if the new terms don’t work for you. Banks may deliver these notices electronically as long as they comply with the Electronic Signatures in Global and National Commerce Act, which generally requires your prior consent to receive disclosures in digital form.

What You Can Do If a Bank Violates the Rules

The CFPB has primary enforcement authority over banks and savings institutions for Regulation DD compliance. When a bank systematically ignores disclosure requirements, the consequences can be significant: in at least one enforcement action, the CFPB alleged that a bank’s violations cost consumers over $2 billion in lost interest earnings. Penalties in such cases can include restitution, disgorgement, and civil money penalties.

Individual consumers can also sue. The civil liability provision at 12 U.S.C. § 4310 lets you recover actual damages caused by a violation, plus additional statutory damages and reasonable attorney’s fees, and class actions are available when a bank’s practices affect many customers at once.¹

If you think your bank is failing to provide required disclosures or is advertising in a misleading way, the most direct step is filing a complaint with the CFPB by phone at (855) 411-2372 or through its online complaint portal.¹³ The bureau forwards complaints to the institution and tracks the response, which often resolves the issue faster than a lawsuit.

1
Office of the Law Revision Counsel. 12 USC Ch. 44 – Truth in Savings
2
eCFR. 12 CFR 1030.2 – Definitions
3
eCFR. 12 CFR Part 707 – Truth in Savings
4
eCFR. 12 CFR 1030.2 – Definitions
5
eCFR. 12 CFR Part 707 – Truth in Savings
6
eCFR. 12 CFR 1030.4 – Account Disclosures
7
eCFR. 12 CFR Part 1030 – Truth in Savings, Regulation DD
8
eCFR. 12 CFR 1030.7 – Payment of Interest
9
eCFR. 12 CFR 1030.8 – Advertising
10
Office of the Law Revision Counsel. 12 USC 4302 – Payment of Interest
11
eCFR. 12 CFR 1030.6 – Periodic Statement Disclosures
12
eCFR. 12 CFR 1030.11 – Additional Disclosure Requirements for Overdraft Services
13
Consumer Financial Protection Bureau. 12 CFR Part 1030 – Truth in Savings, Regulation DD