If an APY appears in an advertisement, what must the ad also include?

Study for the CFPB Mortgage Compliance Test. Learn with detailed quizzes and flashcards. Understand the key concepts, regulations, and guidelines with comprehensive explanations. Get ready to ace your exam!

When an annual percentage yield (APY) is included in an advertisement, it is critical to provide additional information to ensure that consumers understand the terms associated with that APY. This requirement is aimed at promoting transparency and helping potential customers make informed decisions regarding financial products.

Including a statement that fees may reduce earnings on the account is important because it alerts consumers to the fact that the effective yield they receive could be lower than the stated APY if there are associated fees. This insight can influence their decision-making process regarding which account to choose.

In addition, specifying the minimum balance requirement to obtain the stated APY is crucial because many financial products offer different yields based on the balance maintained in the account. By disclosing this information, consumers can accurately gauge whether they can meet the requirements necessary to earn the APY advertised.

Lastly, the time period for which the stated APY is offered is essential information, as some APYs may be promotional and subject to change after a certain period. Consumers need to be aware of any time limitations to assess the potential longevity of the benefit they may receive.

By requiring all of this information to be included whenever an APY is advertised, the intention is to promote clarity and help consumers fully understand the implications of the account they

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