1.This Act may be cited as the
Credit Card Minimum Payment
Notification Act of 2008
.
2.Enhanced disclosure
under an open end credit planSection 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)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)In
this paragraph:
(i)Open-end credit
card accountThe 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)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)
(i)Minimum payment
of not less than ten percentThis 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)This paragraph shall not apply in any billing cycle in
which finance charges are not
imposed.
.