Your Rights and Responsibilities: Lines of Credit

Lines of Credit

When you get a line of credit, your financial institution must give you an initial disclosure statement, called a credit agreement.

Some information must be provided in an information box at the beginning of the credit agreement:

• the initial credit limit, if it is known at the time;
  
  
• the annual interest rate, or the method for determining the rate if it is variable;
  
  
• the date on and after which interest accrues and information concerning any grace period that applies;
  
  
• the minimum payment during each payment period or the method for determining it;
  
  
• any foreign currency conversion fees;
  
  
• any annual fees;
  
  
• any other fees that can be charged.

Here is an example of the information financial institutions must provide you in an information box at the beginning of the line of credit agreement:

• Line of credit agreement

Your credit agreement should also include the following information:

• each period for which a statement of account is to be provided;
  
  
• the property, if any, over which the bank takes a security interest under the credit agreement;
  
  
• information about any optional service in relation to the credit agreement that the borrower accepts, the charges for each optional service and the conditions under which the borrower may cancel the service if that information is not disclosed in a separate statement before the optional service is provided; and
  
  
• a local or toll-free telephone number, or a telephone number with a prominent indication that collect calls are accepted, that the borrower may use to get information about the account during the bank's regular business hours.

If the initial credit limit is not known when the initial disclosure statement is made, your financial institution must disclose it in:

• the first statement of account you receive; or
  
  
• a separate statement that you receive either before, or at the same time as you receive your first account statement.

Your financial institution must also give you, once a month if not more often, another disclosure statement that contains the following information:

• the period covered and the opening and closing balances in the period;
  
  
• an itemized statement of account that discloses each amount credited or charged, including interest, and the dates when those amounts were posted to the account;
  
  
• the total payments and the total credit advances and non-interest and interest charges;
  
  
• the annual interest rate that applied on each day in the period and the total of interest charged under those rates in the period;
  
  
• the credit limit and the amount of credit available at the end of the period;
  
  
• the minimum payment and its due date;
  
  
• your rights and obligations regarding any billing error that may appear in the statement of account; and
  
  
• a local or toll-free telephone number, or a telephone number with a prominent indication that collect calls are accepted, that the borrower may use to get information about the account during the bank's regular business hours.

You may not receive the additional disclosure statement if there have been no advances or payments and:

• the outstanding balance is less than $10 and no interest or fees being charged, or
  
  
• your credit agreement has been suspended or cancelled due to default and the bank has demanded payment of the outstanding balance.

Advertising

A bank that advertises a loan involving a line of credit in an advertisement that makes a representation of the annual interest rate, or the amount of any payment or of any non-interest charge, in relation to the loan must disclose the annual rate of interest on the date of the advertisement and any initial or periodic non-interest charges at least as prominently as the representation and in the same manner, whether visually or aurally, or both.