Credit Card Minimum Payment Notification Act - Amends the Truth in Lending Act regarding disclosures required with each billing cycle under an open end consumer credit plan to require a credit card issuer to include in specified type a written statement in the following form: "Minimum Payment Warning: Making only the minimum payment will increase the interest you pay and the time it takes to repay your balance."
Prescribes additional three-line statements disclosing the length of time it will take to pay off balances and the final cost to the consumer of interest rates charged.
Requires disclosure of a toll-free telephone number to obtain an estimate in person rather than a recording of the time to repay the balance making only minimum payments and the total amount of those payments.
Directs the Federal Trade Commission to establish a detailed table illustrating the approximate number of months that it would take and the approximate total cost to repay an outstanding balance if the consumer pays only the required minimum monthly payments and if no other additional charges or fees are incurred on the account.
Exempts from such disclosure requirements any billing cycle in which: (1) the account agreement requires a minimum payment of not less than 10% of the outstanding balance; and (2) finance charges are not imposed.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4413 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 4413
To amend the Truth in Lending Act to provide for enhanced disclosure
under an open end credit plan.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 18, 2005
Mr. Meek of Florida (for himself and Mr. Ryan of Ohio) introduced the
following bill; which was referred to the Committee on Financial
Services
_______________________________________________________________________
A BILL
To amend the Truth in Lending Act to provide for enhanced disclosure
under an open end credit plan.
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
Notification Act''.
SEC. 2. ENHANCED DISCLOSURE UNDER AN OPEN END CREDIT PLAN.
Section 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)) is
amended by adding at the end the following:
``(13) Enhanced disclosure under an open end credit plan.--
``(A) In general.--A credit card issuer shall, with
each billing statement provided to a cardholder in a
State, provide the following on the front of the first
page of the billing statement in type no smaller than
that required for any other required disclosure, but in
no case in less than 8-point capitalized type:
``(i) A written statement in the following
form: `Minimum Payment Warning: Making only the
minimum payment will increase the interest you
pay and the time it takes to repay your
balance.'.
``(ii) Either of the following:
``(I) A written statement in the
form of and containing the information
described in item (aa) or (bb), as
applicable, as follows:
``(aa) A written 3-line
statement, as follows: `A one
thousand dollar ($1,000)
balance will take 17 years and
3 months to pay off at a total
cost of two thousand five
hundred ninety dollars and
thirty-five cents ($2,590.35).
A two thousand five hundred
dollar ($2,500) balance will
take 30 years and 3 months to
pay off at a total cost of
seven thousand seven hundred
thirty-three dollars and forty-
nine cents ($7,733.49). A five
thousand dollar ($5,000)
balance will take 40 years and
2 months to pay off at a total
cost of sixteen thousand three
hundred five dollars and
thirty-four cents ($16,305.34).
This information is based on an
annual percentage rate of 17
percent and a minimum payment
of 2 percent or ten dollars
($10), whichever is greater.'.
In the alternative, a credit
card issuer may provide this
information for the 3 specified
amounts at the annual
percentage rate and required
minimum payment that are
applicable to the cardholder's
account. The statement provided
shall be immediately preceded
by the statement required by
clause (i).
``(bb) Instead of the
information required by item
(aa), retail credit card
issuers shall provide a written
3-line statement to read, as
follows: `A two hundred fifty
dollar ($250) balance will take
2 years and 8 months to pay off
at a total cost of three
hundred twenty-five dollars and
twenty-four cents ($325.24). A
five hundred dollar ($500)
balance will take 4 years and 5
months to pay off at a total
cost of seven hundred nine
dollars and ninety cents
($709.90). A seven hundred
fifty dollar ($750) balance
will take 5 years and 5 months
to pay off at a total cost of
one thousand ninety-four
dollars and forty-nine cents
($1,094.49). This information
is based on an annual
percentage rate of 21 percent
and a minimum payment of 5
percent or ten dollars ($10),
whichever is greater.'. In the
alternative, a retail credit
card issuer may provide this
information for the 3 specified
amounts at the annual
percentage rate and required
minimum payment that are
applicable to the cardholder's
account. The statement provided
shall be immediately preceded
by the statement required by
clause (i). A retail credit
card issuer is not required to
provide this statement if the
cardholder has a balance of
less than five hundred dollars
($500).
``(II) A written statement
providing individualized information
indicating an estimate of the number of
years and months and the approximate
total cost to pay off the entire
balance due on an open-end credit card
account if the cardholder were to pay
only the minimum amount due on the
open-ended account based upon the terms
of the credit agreement. For purposes
of this subclause only, if the account
is subject to a variable rate, the
creditor may make disclosures based on
the rate for the entire balance as of
the date of the disclosure and indicate
that the rate may vary. In addition,
the cardholder shall be provided with
referrals or, in the alternative, with
the `800' telephone number of the
National Foundation for Credit
Counseling through which the cardholder
can be referred, to credit counseling
services in, or closest to, the
cardholder's county of residence. The
credit counseling service shall be in
good standing with the National
Foundation for Credit Counseling or
accredited by the Council on
Accreditation for Children and Family
Services. The creditor is required to
provide, or continue to provide, the
information required by this clause
only if the cardholder has not paid
more than the minimum payment for 6
consecutive months, beginning after
July 1, 2002.
``(iii)(I) A written statement in the
following form: `For an estimate of the time it
would take to repay your balance, making only
minimum payments, and the total amount of those
payments, call this toll-free telephone number:
(Insert toll-free telephone number).'. This
statement shall be provided immediately
following the statement required by clause
(ii)(I). A credit card issuer is not required
to provide this statement if the disclosure
required by clause (ii)(II) has been provided.
``(II) The toll-free telephone number shall
be available between the hours of 8 a.m. and 9
p.m., 7 days a week, and shall provide
consumers with the opportunity to speak with a
person, rather than a recording, from whom the
information described in subclause (I) may be
obtained.
``(III) The Federal Trade Commission shall
establish not later than 1 month after the date
of the enactment of this paragraph a detailed
table illustrating the approximate number of
months that it would take and the approximate
total cost to repay an outstanding balance if
the consumer pays only the required minimum
monthly payments and if no other additional
charges or fees are incurred on the account,
such as additional extension of credit,
voluntary credit insurance, late fees, or
dishonored check fees by assuming all of the
following:
``(aa) A significant number of
different annual percentage rates.
``(bb) A significant number of
different account balances, with the
difference between sequential examples
of balances being no greater than $100.
``(cc) A significant number of
different minimum payment amounts.
``(dd) That only minimum monthly
payments are made and no additional
charges or fees are incurred on the
account, such as additional extensions
of credit, voluntary credit insurance,
late fees, or dishonored check fees.
``(IV) A creditor that receives a request
for information described in subclause (I) from
a cardholder through the toll-free telephone
number disclosed under subclause (I), or who is
required to provide the information required by
clause (ii)(II), may satisfy the creditor's
obligation to disclose an estimate of the time
it would take and the approximate total cost to
repay the cardholder's balance by disclosing
only the information set forth in the table
described in subclause (III). Including the
full chart along with a billing statement does
not satisfy the obligation under this
paragraph.
``(B) Definitions.--In this paragraph:
``(i) Open-end credit card account.--The
term `open-end credit card account' means an
account in which consumer credit is granted by
a creditor under a plan in which the creditor
reasonably contemplates repeated transactions,
the creditor may impose a finance charge from
time to time on an unpaid balance, and the
amount of credit that may be extended to the
consumer during the term of the plan is
generally made available to the extent that any
outstanding balance is repaid and up to any
limit set by the creditor.
``(ii) Retail credit card.--The term
`retail credit card' means a credit card that
is issued by or on behalf of a retailer, or a
private label credit card, that is limited to
customers of a specific retailer.
``(C) Exemptions.--
``(i) Minimum payment of not less than ten
percent.--This paragraph shall not apply in any
billing cycle in which the account agreement
requires a minimum payment of not less than 10
percent of the outstanding balance.
``(ii) No finance charges.--This paragraph
shall not apply in any billing cycle in which
finance charges are not imposed.''.
<all>
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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