Credit Card Minimum Payment Warning Act of 2005 - Amends the Truth in Lending Act to include among the mandatory disclosures at each billing cycle of open end consumer credit plans: (1) the words "Minimum Payment Warning: Making only the minimum payment will increase the amount of interest that you pay and the time it will take to repay your outstanding balance;" (2) the number of years and months it would take the consumer to pay the entire amount of the balance if the consumer pays only the required minimum monthly payments; (3) the total cost to the consumer, as well as a breakdown in principal and interest payments, of paying that balance in full if the consumer pays only the required minimum monthly payments, and if no further advances are made; (4) the monthly payment amount that would be required to eliminate the outstanding balance in 36 months if no further advances are made; and (5) a toll-free telephone number for information about accessing credit counseling and debt management services.
Directs the Board of Governors of the Federal Reserve System and the Federal Trade Commission to issue jointly guidelines for creditors to establish and maintain a toll-free telephone number for such disclosures.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3852 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 3852
To require enhanced disclosure to consumers regarding the consequences
of making only minimum required payments in the repayment of credit
card debt, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 21, 2005
Mr. Price of North Carolina introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To require enhanced disclosure to consumers regarding the consequences
of making only minimum required payments in the repayment of credit
card debt, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Credit Card Minimum Payment Warning
Act of 2005''.
SEC. 2. ENHANCED CONSUMER DISCLOSURES REGARDING MINIMUM PAYMENTS.
Section 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)) is
amended by adding at the end the following new paragraph:
``(12)(A) Information regarding repayment of the
outstanding balance of the consumer under the account,
appearing in conspicuous type on the front of the first page of
each such billing statement, and accompanied by an appropriate
explanation, containing--
``(i) the words `Minimum Payment Warning: Making
only the minimum payment will increase the amount of
interest that you pay and the time it will take to
repay your outstanding balance.';
``(ii) the number of years and months (rounded to
the nearest month) that it would take for the consumer
to pay the entire amount of that balance, if the
consumer pays only the required minimum monthly
payments;
``(iii) the total cost to the consumer, shown as
the sum of all principal and interest payments, and a
breakdown of the total costs in interest and principal,
of paying that balance in full if the consumer pays
only the required minimum monthly payments, and if no
further advances are made;
``(iv) the monthly payment amount that would be
required for the consumer to eliminate the outstanding
balance in 36 months if no further advances are made;
and
``(v) a toll-free telephone number at which the
consumer may receive information about accessing credit
counseling and debt management services.
``(B)(i) Subject to clause (ii), in making the disclosures
under subparagraph (A) the creditor shall apply the interest
rate in effect on the date on which the disclosure is made.
``(ii) If the interest rate in effect on the date on which
the disclosure is made is a temporary rate that will change
under a contractual provision specifying a subsequent interest
rate or applying an index or formula for subsequent interest
rate adjustment, the creditor shall apply the interest rate in
effect on the date on which the disclosure is made for as long
as that interest rate will apply under that contractual
provision, and then shall apply the adjusted interest rate, as
specified in the contract. If the contract applies a formula
that uses an index that varies over time, the value of such
index on the date on which the disclosure is made shall be used
in the application of the formula.''.
SEC. 3. ACCESS TO CREDIT COUNSELING AND DEBT MANAGEMENT INFORMATION.
(a) Guidelines Required.--
(1) In general.--Not later than 1 year after the date of
the enactment of this Act, the Board of Governors of the
Federal Reserve System and the Federal Trade Commission
(hereafter in this section referred to as the ``Board'' and the
``Commission'', respectively) shall jointly, by rule,
regulation, or order, issue guidelines for the establishment
and maintenance by creditors of a toll-free telephone number
for purposes of the disclosures required under section
127(b)(11) of the Truth in Lending Act, as added by this Act.
(2) Approved agencies.--Guidelines issued under this
subsection shall ensure that referrals provided by the toll-
free number include only those agencies approved by the Board
and the Commission as meeting the criteria under this section.
(b) Criteria.--The Board and the Commission shall only approve a
nonprofit budget and credit counseling agency for purposes of this
section that--
(1) demonstrates that it will provide qualified counselors,
maintain adequate provision for safekeeping and payment of
client funds, provide adequate counseling with respect to
client credit problems, and deal responsibly and effectively
with other matters relating to the quality, effectiveness, and
financial security of the services it provides;
(2) at a minimum--
(A) is registered as a nonprofit entity under
section 501(c) of the Internal Revenue Code of 1986;
(B) has a board of directors, the majority of the
members of which--
(i) are not employed by such agency; and
(ii) will not directly or indirectly
benefit financially from the outcome of the
counseling services provided by such agency;
(C) if a fee is charged for counseling services,
charges a reasonable and fair fee, and provides
services without regard to ability to pay the fee;
(D) provides for safekeeping and payment of client
funds, including an annual audit of the trust accounts
and appropriate employee bonding;
(E) provides full disclosures to clients, including
funding sources, counselor qualifications, possible
impact on credit reports, any costs of such program
that will be paid by the client, and how such costs
will be paid;
(F) provides adequate counseling with respect to
the credit problems of the client, including an
analysis of the current financial condition of the
client, factors that caused such financial condition,
and how such client can develop a plan to respond to
the problems without incurring negative amortization of
debt;
(G) provides trained counselors who--
(i) receive no commissions or bonuses based
on the outcome of the counseling services
provided;
(ii) have adequate experience; and
(iii) have been adequately trained to
provide counseling services to individuals in
financial difficulty, including the matters
described in subparagraph (F);
(H) demonstrates adequate experience and background
in providing credit counseling;
(I) has adequate financial resources to provide
continuing support services for budgeting plans over
the life of any repayment plan; and
(J) is accredited by an independent, nationally
recognized accrediting organization.
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Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Referred to the Subcommittee on Financial Institutions and Consumer Credit.
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