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.

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:
            ``(11)(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 
        enactment of this Act, the Board of Governors of the Federal 
        Reserve System and the Federal Trade Commission (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.

Summary: 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.