The Consumer Financial Protection Bureau (CFPB) and the Federal Reserve (the Fed) have announced the 2023-dollar thresholds for consumer credit and lease transactions to determine whether they are exempt from Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing).
These thresholds are annually adjusted based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). According to regulations, if there is no annual percentage increase in the CPI-W, the agencies will not adjust the exemption threshold from the prior year. In years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage change in the CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been considered.
The CPI-W in effect as of June 1, 2022, showed an 8.9 percent increase from the year before. Pursuant to the above formula, the exemption threshold for both Regulation Z and Regulation M will increase from $61,000 to $66,400. The new thresholds will be effective Jan. 1, 2023.
These thresholds generally apply to consumer credit transactions and consumer leases at or less than the designated amount. However, private education loans and loans secured by real property are subject to Regulation Z regardless of the amount of the loan.
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