This is the first in a series of articles about multi-featured open-end lending. Watch for more articles in 2006.

After reading the title to this article, you may be asking “What in the world is multi-featured open-end lending?” You may think of open-end lending as credit cards, overdraft protection, and other lines of credit. But, to paraphrase a recent car ad, “this isn’t your father’s open-end lending.”

Actually, the phrase multi-featured open-end lending is derived from The Commentary to Regulation Z, the federal regulation governing Truth in Lending disclosures. The Commentary on the definition of “open-end credit” (Section 2(a)(20)) says:

    2. Existence of a plan. The definition requires that there be a plan, which connotes a contractual arrangement between the creditor and the consumer. Some creditors offer programs containing a number of different credit features. The consumer has a single account with the institution that can be accessed repeatedly via a number of sub-accounts established for the different program features and rate structures. Some features of the program might be used repeatedly (for example, an overdraft line) while others might be used infrequently (such as the part of the credit line available for secured credit). If the program as a whole is subject to prescribed terms and otherwise meets the definition of open-end credit, such a program would be considered a single, multi-featured plan.