We do not recommend charging fees that are not disclosed in your loan agreement or in another document that is incorporated by reference, such as a fee schedule or “rules and regulations.” A verbal disclosure of a fee not previously disclosed would not suffice.

If you are contemplating a new fee, such as a pay-by-phone fee, you need to follow the steps detailed in your contractual change-in-terms provisions, which should be found in your loan agreement. Also note that if these loans are subject to Regulation Z, you also need to follow the change-in-terms requirements in that regulation, particularly in the open-end credit requirements.

For resources related to our guidance, please see:

• Illinois Banking Act, 205 ILCS 5/5e(a) (“Notwithstanding the provisions of any other law in connection with extensions of credit, a State bank may elect to contract for and receive interest, fees, and other charges for extensions of credit subject only to the provisions of subsection (1) of Section 4 of the Interest Act, except for extensions of credit secured by residential real estate, which shall be subject to the laws applicable thereto.”)

• Illinois Banking Act, 205 ILCS 5/5e(b) (“The establishment of account service charges and the amounts of the charges not otherwise limited or prescribed by law is a business decision to be made by a bank according to prudent business judgment and safe and sound operating standards. . . .”)

• Interest Act, 815 ILCS 205/4(1) (“It is lawful for a state bank . . . to receive or to contract to receive and collect interest and charges at any rate or rates agreed upon by the bank or branch and the borrower.”)

• Regulation Z, 12 CFR 1026.9(c) (Change-in-terms requirements for open-end credit.)