What must be disclosed about early withdrawal penalties?

The requirement to disclose early withdrawal penalties under the Truth in Savings Act (TISA) focuses on providing clarity and transparency for consumers regarding their potential costs when accessing funds before maturity. The correct choice emphasizes that institutions must inform account holders not just that a penalty may be imposed, but also how that penalty is calculated.

This is essential for consumers to make informed decisions about their savings options. Knowing that there could be a penalty helps consumers weigh the risks associated with early withdrawals. Additionally, understanding how the penalty is calculated allows them to estimate the exact financial implications of accessing their funds prematurely, which can influence their savings strategy. Providing full transparency about potential penalties plays a crucial role in fostering trust between financial institutions and their customers.