[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 480 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 480

  To amend the Truth in Lending Act to protect consumers from certain 
  unreasonable practices of creditors which result in higher fees or 
   rates of interest for credit cardholders, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 25, 1999

  Mr. Schumer introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
  To amend the Truth in Lending Act to protect consumers from certain 
  unreasonable practices of creditors which result in higher fees or 
   rates of interest for credit cardholders, 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 Consumer Protection Act 
of 1999''.

SEC. 2. FEES FOR ON-TIME PAYMENTS PROHIBITED.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by adding at the end the following:
    ``(h) Fees for On-Time Payments Prohibited.--
            ``(1) In general.--In the case of any credit card account 
        under an open end credit plan, no minimum finance charge for 
        any period (including any annual period), and no fee in lieu of 
        a minimum finance charge, may be imposed with regard to the 
        account or credit extended under the account solely because the 
        credit extended has been repaid in full before the end of any 
        grace period applicable with respect to the extension of 
        credit.
            ``(2) Scope of application.--Paragraph (1) may not be 
        construed as--
                    ``(A) prohibiting the imposition of any flat annual 
                fee that may be imposed on the consumer in advance of 
                any annual period to cover the cost of maintaining a 
                credit card account referred to in paragraph (1) during 
                that annual period, without regard to whether any 
                credit is actually extended under the account during 
                that annual period; or
                    ``(B) otherwise affecting the imposition of the 
                actual finance charge applicable with respect to any 
                credit extended under the account during that annual 
                period at the annual percentage rate disclosed to the 
                consumer in accordance with this title for the period 
                of time during which any such credit is outstanding.''.

SEC. 3. FREEZE ON INTEREST RATE TERMS AND FEES ON CANCELED CARDS.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by adding at the end the following:
    ``(i) Freeze on Interest Rate Terms and Fees on Canceled Cards.--
            ``(1) Advance notice of increase in interest rate 
        required.--In the case of any credit card account under an open 
        end credit plan, no increase in any annual percentage rate of 
        interest (other than an increase due solely to a change in 
        another rate of interest to which such rate is indexed) 
        applicable to any outstanding balance of credit under such plan 
        may take effect before the beginning of the billing cycle that 
        begins not earlier than 15 days after the cardholder receives 
        notice of such increase.
            ``(2) Increase not effective for canceled accounts.--If a 
        cardholder referred to in paragraph (1) cancels the credit card 
        account before the beginning of the billing cycle referred to 
        in that paragraph and surrenders all unexpired credit cards 
        issued in connection with the account--
                    ``(A) an annual percentage rate of interest 
                applicable after the cancellation with respect to the 
                outstanding balance on the account as of the date of 
                cancellation may not exceed any annual percentage rate 
                of interest applicable with respect to such balance 
                under the terms and conditions in effect before the 
                increase referred to in paragraph (1); and
                    ``(B) the repayment of the outstanding balance 
                after the cancellation shall be subject to all other 
                terms and conditions applicable with respect to the 
                account before the increase referred to in paragraph 
                (1).
            ``(3) Notice of right to cancel.--The notice referred to in 
        paragraph (1) with respect to an increase in annual percentage 
        rate of interest shall contain a brief description of the right 
        of the consumer--
                    ``(A) to cancel the account before the effective 
                date of the increase; and
                    ``(B) after such cancellation, to pay any balance 
                outstanding on the account at the time of cancellation 
                in accordance with the terms and conditions in effect 
                before the cancellation.''.

SEC. 4. DISCLOSURE OF FEES AND INTEREST RATES ON CREDIT ADVANCES 
              THROUGH THE USE OF THIRD PARTY CHECKS.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by adding at the end the following:
    ``(j) Fees and Interest Rates on Credit Advances Through the Use of 
Third Party Checks.--
            ``(1) In general.--In the case of any credit card account 
        under an open end credit plan, a creditor may not provide the 
        cardholder with any negotiable or transferable instrument for 
        use in making an extension of credit to the cardholder for the 
        purpose of making a transfer to a third party unless the 
        creditor has fully satisfied the notice requirements of 
        paragraph (2) with respect to that instrument.
            ``(2) Notice requirements.--A creditor meets the notice 
        requirements of this paragraph with respect to an instrument 
        referred to in paragraph (1) if the creditor provides to a 
        cardholder, at the same time that any such instrument is 
        provided, a notice that prominently and specifically 
        describes--
                    ``(A) the amount of any transaction fee that may be 
                imposed for making an extension of credit through the 
                use of the instrument, including the exact percentage 
                rate to be used in determining the amount, if the 
                amount of the transaction fee is expressed as a 
                percentage of the amount of the credit extended; and
                    ``(B) any annual percentage rate of interest 
                applicable in determining the finance charge for any 
                such extension of credit.''.

SEC. 5. PROHIBITION ON OVER-THE-LIMIT FEES IN CREDITOR-APPROVED 
              TRANSACTIONS.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by adding at the end the following:
    ``(k) Limitation on Imposition of Over-the-Limit Fees.--In the case 
of any credit card account under an open end credit plan, a creditor 
may not impose any fee on the cardholder for any extension of credit in 
excess of the amount of credit authorized to be extended with respect 
to the account if the extension of credit is made in connection with a 
credit transaction that the creditor approves in advance of or at the 
time of the transaction.''.

SEC. 6. PROHIBITION ON 2-CYCLE BILLING.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by adding at the end the following:
    ``(l) Prohibition on 2-Cycle Billing.--In the case of any credit 
card account under an open end credit plan, if the creditor provides, 
with regard to any new extension of credit under the account, a period 
during which the extension of credit may be repaid without incurring a 
finance charge for the extension of credit, no finance charge may 
subsequently be imposed for that period with regard to any unpaid 
balance (as of the end of that period) of the extension of credit.''.

SEC. 7. DISCLOSURES RELATED TO ``TEASER RATES''.

    Section 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) is 
amended--
            (1) by redesignating paragraph (5) as paragraph (6); and
            (2) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) Additional notice concerning `teaser rates'.--
                    ``(A) In general.--An application or solicitation 
                for a credit card for which a disclosure is required 
                under this subsection shall contain the disclosures 
                contained in subparagraph (B) or (C), as applicable, if 
                the application or solicitation offers, for an 
                introductory period of less than 1 year, an annual 
                percentage rate of interest that--
                            ``(i) is less than the annual percentage 
                        rate of interest that will apply after the end 
                        of the introductory period; or
                            ``(ii) in the case of an annual percentage 
                        rate that varies in accordance with an index 
                        that is less than the current annual percentage 
                        rate under the index that will apply after the 
                        end of the period.
                    ``(B) Fixed annual percentage rate.--If the annual 
                percentage rate that will apply after the end of the 
                introductory period will be a fixed rate, the 
                application or solicitation shall include the following 
                disclosure: `The annual percentage rate of interest 
                applicable during the introductory period is not the 
                annual percentage rate that will apply after the end of 
                the introductory period. The permanent annual 
                percentage rate will apply after [insert date] and will 
                be [insert percentage rate].'.
                    ``(C) Variable annual percentage rate.--If the 
                annual percentage rate that will apply after the end of 
                the introductory period will vary in accordance with an 
                index, the application or solicitation shall include 
                the following disclosure: `The annual percentage rate 
                of interest applicable during the introductory period 
                is not the annual percentage rate that will apply after 
                the end of the introductory period. The permanent 
                annual percentage rate will be determined by an index, 
                and will apply after [insert date]. If the index that 
                will apply after such date were applied to your account 
                today, the annual percentage rate would be [insert 
                percentage rate].'.
                    ``(D) Form of disclosure.--The disclosures required 
                under this paragraph shall be made in a clear and 
                conspicuous manner, in a form at least as prominent as 
                the disclosure of the annual percentage rate of 
                interest that will apply during the introductory 
                period.''.
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