In "open-end credit," the creditor:

(1) reasonably expects the consumer to make repeated transactions;

(2) may impose a finance charge from time to time on the unpaid balance; and

(3) generally makes the amount of credit available again to the consumer as the outstanding balance is paid.

Examples of open-end credit include bank and retail gasoline credit cards, department store revolving charge accounts, and cash-advance checking accounts.

"Closed-end credit" includes all consumer credit that does not fit the definition of open-end credit. Closed-end credit consists of both sales credit and loans. In a typical closed-end credit transaction, credit is advanced for a specific time period, and the amount financed, finance charge, and schedule of payments are agreed upon by the creditor and the consumer.

Closed-End Credit Disclosures

When closed-end credit is offered or extended, the Truth in Lending Act requires the creditor to disclose certain information before the loan contract is signed. The disclosures must be made clearly and conspicuously, in writing, and in a form the consumer can keep. Special disclosure rules apply to applications taken by telephone or mail and loans involving real estate.

Generally, the following information must be disclosed:

(1) the identity of the creditor;

(2) the amount financed;

(3) the annual percentage rate;

(4) any applicable finance charges and how they are calculated;

(5) any applicable prepayment or late payment penalties and how they are calculated;

(6) the total amount of payments, the number of payments, and the payment schedule; and

(7) the total sales price.

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