Maryland Legal Alert for Financial Services

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Maryland Minimum Interest Rate for Escrow and Special Purpose Accounts

CFPB Addresses Potential Compliance Gaps in Credit Card Rewards Programs

Maryland Minimum Interest Rate for Escrow and Special Purpose Accounts  

Maryland law requires depository institutions doing business in Maryland that make first lien residential real property loans and maintain escrow accounts for those loans to pay a minimum rate of interest on those escrow accounts. Maryland law also requires Maryland-chartered banks that offer certain short-term “special purpose” deposit accounts (for example, Christmas Club accounts) to pay a minimum rate of interest on those deposit accounts.  

The minimum rate of interest on these accounts is based on the weekly average yield of U.S. Treasury Securities adjusted to a constant maturity of one year as of the first business day of the calendar year as published in the Federal Reserve Board’s “Selected Interest Rates” Table H.15. Because the Federal Reserve Board’s H.15 Table no longer includes a “weekly average yield” for the selected one-year securities, many institutions look to the weekly average yield interest rate data posted by the Federal Reserve Bank of St. Louis (using the H.15 daily rate information). 

The Federal Reserve Bank of St. Louis displays a 4.23% weekly average yield for U.S. Treasury Securities adjusted to a constant maturity of one year (reflecting the weekly average yield for the weekly period ending on December 27, 2024, as posted on January 2, 2025). 

For more information, contact Christopher R. Rahl.

Contact Christopher R. Rahl | 410-576-4222

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CFPB Addresses Potential Compliance Gaps in Credit Card Rewards Programs 

The Consumer Financial Protection Bureau (CFPB) has recently released a circular to law enforcement agencies addressing potential violations of the law by credit card issuers administering reward programs. CFPB highlighted that misleading or unfair practices, such as unilaterally changing reward values (similar to bait-and-switch tactics), using vague terms or fine print to revoke or cancel rewards, or failing to ensure redemption systems work properly, can be considered violations of consumer protection laws. 

The CFPB emphasized that these violations may occur even when the conduct in question is attributable to third parties, such as merchant partners, stressing the shared responsibility of all parties involved in rewards programs. Overall, the circular reinforces that credit card rewards programs must be designed, marketed, and administered transparently and fairly to comply with federal consumer financial law. In addition to the circular, the CFPB also released research highlighting the high costs and consumer complaints associated with retail credit cards and launched a new tool, Explore Credit Cards, to help consumers find credit cards with lower interest rates and better terms.  

Practice Pointer: Credit card issuers operating rewards programs should prioritize transparency, fairness, and compliance to meet regulatory expectations. This includes maintaining the advertised value of rewards, ensuring redemption processes are straightforward and accessible, and clearly disclosing all terms and conditions of the reward program. Additionally, issuers should conduct proactive audits—both internally and through third parties—to identify and address any compliance risks or consumer issues.  

For more information, contact Christopher R. Rahl or Tamia J. Morris.

Contact Christopher R. Rahl | 410-576-4222

Contact Tamia J. Morris | 410-576-4021

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