[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1040 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                S. 1040

 To amend the Truth in Lending Act to provide for enhanced disclosure 
                     under an open end credit plan.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 16, 2005

Mrs. Feinstein 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 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 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>