I 

109TH CONGRESS 

2D SESSION H. R. 5383 

To amend the Consumer Credit Protection Act to ban abusive credit practices, 

enhance consumer disclosures, protect underage consumers, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 11, 2006 

Mr. UDALL of Colorado (for himself, Mr. STUPAK, Mr. RYAN of Ohio, Ms. 

CARSON, Mr. GRIJALVA, Mrs. CHRISTENSEN, and Mr. CASE) introduced 

the following bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the Consumer Credit Protection Act to ban abusive credit practices, enhance consumer disclosures, protect underage consumers, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 This Act may be cited as the ‘‘Credit Card Account5 ability Responsibility and Disclosure Act of 2006’’ or the 

6 ‘‘Credit CARD Act of 2006’’. 


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1 SEC. 2. REGULATORY AUTHORITY. 

2 The Board of Governors of the Federal Reserve Sys3 tem may issue such rules or publish such model forms as 

4 it considers necessary to carry out this Act and the 

5 amendments made by this Act, in accordance with sections 

6 105 and 122 of the Truth in Lending Act. 

7 TITLE I—REGULATIONS RE8 GARDING CERTAIN RATES 

9 AND FEES 

10 SEC. 101. PRIOR NOTICE OF RATE INCREASES REQUIRED. 

11 Section 127 of the Truth in Lending Act (15 U.S.C. 

12 1637) is amended by adding at the end the following: 

13 ‘‘(h) ADVANCE NOTICE OF INCREASE IN INTEREST

14 RATE REQUIRED.— 

15 ‘‘(1) IN GENERAL.—In the case of any credit 

16 card account under an open end consumer credit 

17 plan, no increase in any annual percentage rate of 

18 interest (other than an increase due to the expira19 tion of any introductory percentage rate of interest, 

20 or due solely to a change in another rate of interest 

21 to which such rate is indexed)— 

22 ‘‘(A) may take effect before the beginning 

23 of the billing cycle which begins not less than 

24 15 days after the obligor receives notice of such 

25 increase; or 


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1 ‘‘(B) may apply to any outstanding balance 

2 of credit under such plan as of the date of the 

3 notice of the increase required under paragraph 

4 (1). 

5 ‘‘(2) NOTICE OF RIGHT TO CANCEL.—The no6 tice referred to in paragraph (1) with respect to an 

7 increase in any annual percentage rate of interest 

8 shall be made in a clear and conspicuous manner 

9 and shall contain a brief statement of the right of 

10 the obligor to cancel the account before the effective 

11 date of the increase.’’. 

12 SEC. 102. FREEZE ON INTEREST RATE TERMS AND FEES ON 

13 CANCELED CARDS. 

14 Section 127 of the Truth in Lending Act (15 U.S.C. 

15 1637) is amended by inserting after subsection (h) (as 

16 added by section 101 of this title) the following new sub17 section: 

18 ‘‘(i) FREEZE ON INTEREST RATE TERMS AND FEES

19 ON CANCELED CARDS.—If an obligor referred to in sub20 section (h) closes or cancels a credit card account before 

21 the beginning of the billing cycle referred to in subsection 

22 (h)(1)— 

23 ‘‘(1) an annual percentage rate of interest ap24 plicable after the cancellation with respect to the 

25 outstanding balance on the account as of the date of 


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1 cancellation may not exceed any annual percentage 

2 rate of interest applicable with respect to such bal3 ance under the terms and conditions in effect before 

4 the date of the notice of any increase referred to in 

5 subsection (h)(1); and 

6 ‘‘(2) the repayment of the outstanding balance 

7 after the cancellation shall be subject to all other 

8 terms and conditions applicable with respect to such 

9 account before the date of the notice of the increase 

10 referred to in subsection (h).’’. 

11 SEC. 103. LIMITS ON FINANCE AND INTEREST CHARGES 

12 FOR ON-TIME PAYMENTS. 

13 Section 127 of the Truth in Lending Act (15 U.S.C. 

14 1637) is amended by inserting after subsection (i) (as 

15 added by section 102 of this title) the following new sub16 section: 

17 ‘‘(j) PROHIBITION ON PENALTIES FOR ON-TIME

18 PAYMENTS.— 

19 ‘‘(1) PROHIBITION ON FINANCE CHARGES FOR

20 ON-TIME PAYMENTS.—In the case of any credit card 

21 account under an open end credit plan, where no 

22 other balance is owing on the account, no finance or 

23 interest charge may be imposed with regard to any 

24 amount of a new extension of credit that was paid 

25 on or before the date on which it was due. 


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1 ‘‘(2) PROHIBITION ON CANCELLATION OR ADDI2 TIONAL FEES FOR ON-TIME PAYMENTS OR PAYMENT

3 IN FULL.—In the case of any credit card account 

4 under an open end consumer credit plan, no fee or 

5 other penalty may be imposed on the consumer in 

6 connection with the payment in full of an existing 

7 account balance, or payment of more than the min8 imum required payment of an existing account bal9 ance.’’. 

10 SEC. 104. PROHIBITION ON OVER-THE-LIMIT FEES FOR 

11 CREDITOR-APPROVED TRANSACTIONS. 

12 Section 127 of the Truth in Lending Act (15 U.S.C. 

13 1637) is amended by inserting after subsection (j) (as 

14 added by section 103 of this title) the following new sub15 section: 

16 ‘‘(k) LIMITATION ON IMPOSITION OF OVER-THE17 LIMIT FEES.—In the case of any credit card account 

18 under an open end consumer credit plan, a creditor may 

19 not impose any fees on the obligor for any extension of 

20 credit in excess of the amount of credit authorized to be 

21 extended with respect to such account, if the extension of 

22 credit is made in connection with a credit transaction 

23 which the creditor approves in advance or at the time of 

24 the transaction.’’. 


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1 TITLE II—ENHANCED 

2 CONSUMER DISCLOSURES 

3 SEC. 201. PAYOFF TIMING DISCLOSURES. 

4 (a) IN GENERAL.—Section 127(b) of the Truth in 

5 Lending Act (15 U.S.C. 1637(b)) is amended by adding 

6 at the end the following new paragraph: 

7 ‘‘(12) REPAYMENT INFORMATION.— 

8 ‘‘(A) IN GENERAL.—Repayment informa9 tion that would apply to the outstanding bal10 ance of the consumer under the credit plan, in11 cluding— 

12 ‘‘(i) the outstanding balance in the ac13 count at the beginning of the statement 

14 period, as required by paragraph (1) of 

15 this subsection; 

16 ‘‘(ii) the required minimum monthly 

17 payment on that balance, represented as 

18 both a dollar figure and as a percentage of 

19 that balance; 

20 ‘‘(iii) the grace period within which 

21 payment must be made to avoid additional 

22 charges, as required by paragraph (9) of 

23 this subsection; and 

24 ‘‘(iv) the monthly payments amount 

25 that would be required for the consumer to 


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1 eliminate the outstanding balance in 36 

2 months if no further advances are made. 

3 ‘‘(B) APPLICABLE ANNUAL PERCENTAGE

4 RATE.— 

5 ‘‘(i) IN GENERAL.—Subject to clause 

6 (ii), in making the disclosures under sub7 paragraph (A), the creditor shall apply the 

8 annual percentage rate in effect on the 

9 date on which the disclosure is made until 

10 the date on which the balance would be 

11 paid in full. 

12 ‘‘(ii) EXCEPTION.—If the annual per13 centage rate in effect on the date on which 

14 the disclosure is made is a temporary rate 

15 that will change under a contractual provi16 sion applying an index or formula for sub17 sequent interest rate adjustment, the cred18 itor shall apply the rate in effect on the 

19 date on which the disclosure is made for as 

20 long as that rate will apply under that con21 tractual provision, and then apply an an22 nual percentage rate based on the index or 

23 formula in effect on the applicable billing 

24 date.’’. 


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1 (b) TABULAR FORMAT REQUIRED FOR DISCLO2 SURES.—Section 122 of the Truth in Lending Act (15 

3 U.S.C. 1632) by adding at the end the following new sub4 section: 

5 ‘‘(d) FORMAT REQUIRED FOR CERTAIN DISCLO6 SURES UNDER SECTION 127(b)(12).— 

7 ‘‘(1) FORM OF DISCLOSURE.—All of the infor8 mation disclosed pursuant to section 127(b)(12)(A) 

9 shall— 

10 ‘‘(A) be disclosed in the form and manner 

11 which the Board shall prescribe by regulations 

12 under this section and in accordance with sec13 tion 105; and 

14 ‘‘(B) be placed in a conspicuous and 

15 prominent location on the billing statement in 

16 typeface that is at least as large as the largest 

17 type on the statement, but in no instance less 

18 than 12-point in size. 

19 ‘‘(2) TABULAR FORMAT.—In the regulations 

20 prescribed under paragraph (1), the Board shall re21 quire that the disclosure of such information shall be 

22 in the form of a table that— 

23 ‘‘(A) contains clear and concise headings 

24 for each item of such information; and 


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1 ‘‘(B) provides a clear and concise form 

2 stating each item of information required to be 

3 disclosed under each such heading. 

4 ‘‘(3) REQUIREMENTS REGARDING LOCATION

5 AND ORDER OF TABLE.—In prescribing the form of 

6 the table under paragraph (2), the Board shall re7 quire that— 

8 ‘‘(A) all of the information in the table, 

9 and not just a reference to the table, be placed 

10 on the billing statement, as required by this 

11 subparagraph; and 

12 ‘‘(B) the items required to be included in 

13 the table shall be listed in the order in which 

14 such items are set forth in section 

15 127(b)(12)(A). 

16 ‘‘(4) BOARD DISCRETION IN PRESCRIBING

17 ORDER AND WORDING OF TABLE.—In prescribing 

18 the form of the table under subparagraph (C), the 

19 Board may employ terminology which is different 

20 than the terminology which is employed in subpara21 graph (A), if such terminology is easily understood 

22 and conveys substantially the same meaning.’’. 

23 (c) CIVIL LIABILITY.—Section 130(a) of the Truth 

24 in Lending Act (15 U.S.C. 1640(a)) is amended, in the 

25 undesignated paragraph following paragraph (4), by strikVerDate Aug 31 2005 23:19 May 16, 2006 Jkt 049200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H5383.IH H5383

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1 ing the second sentence and inserting the following: ‘‘In 

2 connection with the disclosures referred to in subsections 

3 (a) and (b) of section 127, a creditor shall have a liability 

4 determined under paragraph (2) only for failing to comply 

5 with the requirements of section 125, 127(a), or para6 graph (4), (5), (6), (7), (8), (9), (10), or (11) of section 

7 127(b), or for failing to comply with disclosure require8 ments under State law for any term or item that the 

9 Board has determined to be substantially the same in 

10 meaning under section 111(a)(2) as any of the terms or 

11 items referred to in section 127(a), or paragraph (4), (5), 

12 (6), (7), (8), (9), (10), (11), or (12) of section 127(b). 

13 SEC. 202. REQUIREMENTS RELATING TO LATE PAYMENT 

14 DEADLINES AND PENALTIES. 

15 Section 127 of the Truth in Lending Act (15 U.S.C. 

16 1637) is amended by inserting after subsection (k) (as 

17 added by section 104 of this Act) the following new sub18 section: 

19 ‘‘(l) REQUIREMENTS RELATING TO LATE PAYMENT

20 DEADLINES AND PENALTIES.— 

21 ‘‘(1) LATE PAYMENT DEADLINE AND POSTMARK

22 DATE REQUIRED TO BE DISCLOSED.—In the case of 

23 a credit card account under an open end consumer 

24 credit plan under which a late fee or charge may be 

25 imposed due to the failure of the obligor to make 


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1 payment on or before the due date for such pay2 ment, the periodic statement required under sub3 section (b) with respect to the account shall include, 

4 in a conspicuous location on the billing statement— 

5 ‘‘(A) the date by which the payment must 

6 be postmarked, if paid by mail, in order to 

7 avoid the imposition of a late payment fee with 

8 respect to the payment; and 

9 ‘‘(B) a statement that no late fee may be 

10 imposed in connection with a payment made by 

11 mail which was postmarked on or before the 

12 postmark date. 

13 ‘‘(2) DISCLOSURE OF INCREASE IN INTEREST

14 RATES FOR LATE PAYMENTS.—If 1 or more late 

15 payments under an open end consumer credit plan 

16 may result in an increase in the annual percentage 

17 rate the account, the statement required under sub18 section (b) with respect to the account shall include 

19 conspicuous notice of such fact, together with the 

20 applicable penalty annual percentage rate, in close 

21 proximity to the disclosure required in paragraph (1) 

22 of the date on which payment is due under the 

23 terms of the account. 

24 ‘‘(3) REQUIREMENTS RELATING TO POSTMARK

25 DATE.— 


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1 ‘‘(A) IN GENERAL.—The date included in 

2 a periodic statement pursuant to paragraph 

3 (1)(B) with regard to the postmark on a pay4 ment shall allow, in accordance with regulations 

5 prescribed by the Board under subparagraph 

6 (B), a reasonable time for the consumer to 

7 make the payment and a reasonable time for 

8 the delivery of the payment by the due date. 

9 ‘‘(B) BOARD REGULATIONS.—The Board 

10 shall prescribe guidelines for determining a rea11 sonable period of time for making a payment 

12 and delivery of a payment for purposes of sub13 paragraph (A), after consultation with the Post14 master General and representatives of consumer 

15 and trade organizations. 

16 ‘‘(4) PAYMENT AT LOCAL BRANCHES.—If the 

17 creditor, in the case of a credit card account referred 

18 to in paragraph (1), is a financial institution which 

19 maintains branches or offices at which payments on 

20 any such account are accepted from the obliger in 

21 person, the date on which the obliger makes a pay22 ment on the account at such branch or office shall 

23 be considered as the date on which the payment is 

24 made for purposes of determining whether a late fee 

25 or charge may be imposed due to the failure of the 


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1 obligor to make payment on or before the due date 

2 for such payment, to the extent that such payment 

3 is made before the close of business of the branch 

4 or office on the business day immediately preceding 

5 the due date for such payment.’’. 

6 TITLE III—PROTECTION OF 

7 YOUNG CONSUMERS 

8 SEC. 301. EXTENSIONS OF CREDIT TO UNDERAGE CON9 SUMERS. 

10 Section 127(c) of the Truth in Lending Act (15 

11 U.S.C. 1637(c)) is amended by adding at the end the fol12 lowing new paragraph: 

13 ‘‘(8) APPLICATIONS FROM UNDERAGE CON14 SUMERS.— 

15 ‘‘(A) PROHIBITION ON ISSUANCE.—No 

16 credit card may be issued to, or open end credit 

17 plan established on behalf of, a consumer who 

18 has not attained the age of 21, unless the con19 sumer has submitted a written application to 

20 the card issuer that meets the requirements of 

21 subparagraph (B). 

22 ‘‘(B) APPLICATION REQUIREMENTS.—An 

23 application to open a credit card account by an 

24 individual who has not attained the age of 21 


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1 as of the date of submission of the application 

2 shall require— 

3 ‘‘(i) the signature of the parent, legal 

4 guardian, or spouse of the consumer, or 

5 any other individual having a means to 

6 repay debts incurred by the consumer in 

7 connection with the account, indicating 

8 joint liability for debts incurred by the con9 sumer in connection with the account be10 fore the consumer has attained the age of 

11 18; 

12 ‘‘(ii) submission by the consumer of 

13 financial information indicating an inde14 pendent means of repaying any obligation 

15 arising from the proposed extension of 

16 credit in connection with the account; or 

17 ‘‘(iii) proof by the consumer that the 

18 consumer has completed a credit coun19 seling course of instruction by a nonprofit 

20 budget and credit counseling agency ap21 proved by the Board for such purpose. 

22 ‘‘(C) MINIMUM REQUIREMENTS FOR COUN23 SELING AGENCIES.—To be approved by the 

24 Board under subparagraph (B)(iii), a credit 

25 counseling agency shall, at a minimum— 


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1 ‘‘(i) be a nonprofit budget and credit 

2 counseling agency, the majority of the 

3 board of directors of which— 

4 ‘‘(I) is not employed by the agen5 cy; and 

6 ‘‘(II) will not directly or indi7 rectly benefit financially from the out8 come of a credit counseling session; 

9 ‘‘(ii) if a fee is charged for counseling 

10 services, charge a reasonable fee, and pro11 vide services without regard to ability to 

12 pay the fee; and 

13 ‘‘(iii) provide trained counselors who 

14 receive no commissions or bonuses based 

15 on referrals, and demonstrate adequate ex16 perience and background in providing cred17 it counseling.’’. 

18 SEC. 302. ENHANCED PENALTIES. 

19 Section 130(a)(2)(A) of the Truth in Lending Act 

20 (15 U.S.C. 1640 (a)(2)(A)(iii)) is amended—— 

21 (1) by striking ‘‘or (iii) in the’’ and inserting 

22 the following: 

23 ‘‘(iii) in the case of an individual action relating 

24 to an open end credit plan that is not secured by 

25 real property or a dwelling, twice the amount of any 


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1 finance charge in connection with the transaction, 

2 with a minimum of $500 and a maximum of $5,000 

3 or such higher amount as may be appropriate in the 

4 case of an established pattern or practice of such 

5 failures; or 

6 ‘‘(iv) in the’’; and. 

7 (2) in clause (ii), by striking ‘‘this subpara8 graph’’ and inserting ‘‘this clause’’. 

9 SEC. 303. RESTRICTIONS ON CERTAIN AFFINITY CARDS. 

10 Section 127 of the Truth in Lending Act (15 U.S.C. 

11 1637) is amended by inserting after subsection (l) (as 

12 added by section 202 of this Act) the following new sub13 section: 

14 ‘‘(m) RESTRICTIONS ON ISSUANCE OF AFFINITY

15 CARDS TO STUDENTS.—No credit card account under an 

16 open end credit plan may be established by an individual 

17 who has not attained the age of 18 as of the date of sub18 mission of the application pursuant to any agreement re19 lating to affinity cards, as defined by the Board, between 

20 the creditor and an institution of higher education (as de21 fined in section 101(a) of the Higher Education Act of 

22 1965), unless the requirements of section 127(c)(8) are 

23 met with respect to the obliger.’’. 

Æ 


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