Regulation

• State and federal laws govern evergreen loans; they determine collection practices, contractual limitations and cost structure. For example, the Credit Card Accountability Responsibility and Disclosure Act of 2009 prohibited a practice called double-cycle-billing that formerly allowed creditors to charge interest for balances paid off in previous billing cycles. Federal laws are also implemented by the Federal Reserve Bank in the form of regulations such as Regulation E, a system of banking rules that enforces the Electronic Funds Transfer Act.
  
  

Interest

• Both fixed and variable interest rates on evergreen loans are independently determined by financial institutions based on the cost of capital and risk associated with lending that capital. Capital costs are linked to loan servicing and interbank borrowing rates such as the Federal Discount Rate. Evergreen loan issuers are not required to offer grace periods on charges. This means even if a loan balance is paid off in full within days of a charge, interest can still accumulate depending on the lender's policy.
  
  

Fees

• Financial charges are incurred on evergreen loans when borrower's receive right to use them and for servicing costs linked to loan transactions; examples include annual, fraud protection and balance transfer fees. Interchange fees are an additional cost directly charged to merchants and financial insitutions for evergreen credit transactions. These costs are passed on to consumers via bank fees or higher retail prices. Due to the interchange fee, some retailers such as gas stations allow cash only customers to obtain market prices below that of credit paying customers.
  
  

Credit

• Individuals and organizations applying for, or holding evergreen loans are subject to credit checks to determine loan eligibility. Financial institutions that issue evergreen loans periodically review the payment history of existing loan holders and adjust credit limits in correspondence to that record. The loan issuer's credit rating can also affect the profit margin and cost of servicing evergreen loans. In such cases lending costs rise and restrict lending because competitors with better credit ratings can offer lower loan interest rates to borrowers.
  
  

Availability

• The size of the loan issuer in terms of total available capital also influences how much credit is made available through evergreen loans. If a lenders largest or most profitable clients are evergreen loan holders, this can favorably influence lending policy, availability and size of an issuer's evergreen loan program. The amount and availability of evergreen loans is also affected by economic activity, which stimulates demand for credit as it becomes more robust.