Truth in Savings Act
Encyclopedia
The Truth in Savings Act (also known by the acronym TISA) is a United States
federal law that was passed on December 19, 1991. It was part of the larger Federal Deposit Insurance Corporation Improvement Act of 1991
and is implemented by Regulation DD. It established uniformity in the disclosure of terms and conditions regarding interest
and fees when giving out information on or opening a new savings account. On passing this law, the US Congress
noted that it would help promote economic stability, competition between depository institutions, and allow the consumer to make informed decisions.
The Truth in Savings Act requires the clear and uniform disclosure of rates of interest (annual percentage yield
or APY) and the fees that are associated with the account so that the consumer is able to make a meaningful comparison between potential accounts. For example, a customer opening a certificate of deposit
account must be provided with information about ladder rates (smaller interest rates with smaller deposits) and penalty fees for early withdrawal of a portion or all of the funds.
The Act is only applicable to deposit accounts that are held by a "natural person" for personal, household, or family use. Accounts owned by businesses or organizations such as churches and neighborhood associations
are not subject to these rules.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
federal law that was passed on December 19, 1991. It was part of the larger Federal Deposit Insurance Corporation Improvement Act of 1991
Federal Deposit Insurance Corporation Improvement Act of 1991
The Federal Deposit Insurance Corporation Improvement Act of 1991 , passed during the Savings and loan crisis, strengthened the power of the Federal Deposit Insurance Corporation....
and is implemented by Regulation DD. It established uniformity in the disclosure of terms and conditions regarding interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
and fees when giving out information on or opening a new savings account. On passing this law, the US Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
noted that it would help promote economic stability, competition between depository institutions, and allow the consumer to make informed decisions.
The Truth in Savings Act requires the clear and uniform disclosure of rates of interest (annual percentage yield
Annual Percentage Yield
Annual percentage yield is a normalized representation of an interest rate, based on a compounding period of one year. APY figures allow for a reasonable, single-point comparison of different offerings with varying compounding schedules...
or APY) and the fees that are associated with the account so that the consumer is able to make a meaningful comparison between potential accounts. For example, a customer opening a certificate of deposit
Certificate of deposit
A certificate of Deposit is a time deposit, a financial product commonly offered to consumers in the United States by banks, thrift institutions, and credit unions....
account must be provided with information about ladder rates (smaller interest rates with smaller deposits) and penalty fees for early withdrawal of a portion or all of the funds.
The Act is only applicable to deposit accounts that are held by a "natural person" for personal, household, or family use. Accounts owned by businesses or organizations such as churches and neighborhood associations
Neighbourhood
A neighbourhood or neighborhood is a geographically localised community within a larger city, town or suburb. Neighbourhoods are often social communities with considerable face-to-face interaction among members. "Researchers have not agreed on an exact definition...
are not subject to these rules.