IB 

Union Calendar No. 41 

111TH CONGRESS 

1ST SESSION H. R. 627 

[Report No. 111–88] 

To amend the Truth in Lending Act to establish fair and transparent practices relating to the extension of credit under an open end consumer 

credit plan, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 22, 2009 

Mrs. MALONEY (for herself, Mr. FRANK of Massachusetts, Mr. JONES, Mr. 

KANJORSKI, Ms. WATERS, Mr. GUTIERREZ, Mr. ACKERMAN, Mr. 

CAPUANO, Mr. ELLISON, Mr. DAVIS of Tennessee, Mr. CLEAVER, Mr. 

GEORGE MILLER of California, Mr. OBEY, Mr. DEFAZIO, Mr. HINOJOSA, 

Mr. MCGOVERN, Mr. YARMUTH, Mr. OLVER, Ms. EDWARDS of Maryland, 

Mr. COURTNEY, Ms. DELAURO, Mr. KENNEDY, Mrs. LOWEY, Mr. BRADY

of Pennsylvania, Mr. CHANDLER, Mr. LOEBSACK, Mr. PASCRELL, Mr. 

BISHOP of New York, Mr. FILNER, Mr. CARNAHAN, Mr. WEINER, Mr. 

MARKEY of Massachusetts, Mr. GRIJALVA, Mr. CUMMINGS, Ms. 

SCHAKOWSKY, Mr. GENE GREEN of Texas, Mr. MORAN of Virginia, Ms. 

SUTTON, Mr. HINCHEY, Ms. BORDALLO, Ms. LEE of California, Mr. 

WELCH, and Mr. HIGGINS) introduced the following bill; which was referred to the Committee on Financial Services 

APRIL 27, 2009 

Additional sponsors: Mr. LYNCH, Ms. WOOLSEY, Mr. SHERMAN, Ms. MATSUI, 

Mr. RAHALL, Mr. DOGGETT, Mr. NYE, Ms. ZOE LOFGREN of California, 

Mr. STUPAK, Mr. BERMAN, Mr. INSLEE, Mr. GONZALEZ, Ms. ESHOO, 

Ms. SHEA-PORTER, Ms. TSONGAS, Mr. VISCLOSKY, Mr. WU, Ms. 

CLARKE, Ms. HIRONO, Mr. COHEN, Mr. SCHAUER, Ms. NORTON, Mr. LIPINSKI, Mr. MAFFEI, Mr. KRATOVIL, Ms. PINGREE of Maine, Mr. 

DELAHUNT, Mr. BLUMENAUER, Mr. ARCURI, Mr. LANGEVIN, Mr. HALL

of New York, Mr. DAVIS of Illinois, Mr. ABERCROMBIE, Mr. JACKSON of 

Illinois, Mr. SCHIFF, Mr. MILLER of North Carolina, Mr. TAYLOR, Mr. 

BRALEY of Iowa, Mr. BISHOP of Georgia, Mr. WAXMAN, Mr. BACA, Mr. 

HONDA, Mr. SERRANO, Mrs. DAVIS of California, Mr. WATT, Mr. LEVIN, 

Mr. STARK, Mr. VAN HOLLEN, Mr. LEWIS of Georgia, Ms. HARMAN, Mr. 


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HASTINGS of Florida, Mr. AL GREEN of Texas, Mr. JOHNSON of Georgia, 

Ms. CASTOR of Florida, Ms. KILROY, Mr. MASSA, Mr. LUJA ́N, Mr. 

KISSELL, Mr. BOSWELL, Mrs. DAHLKEMPER, Mr. PATRICK J. MURPHY

of Pennsylvania, Ms. MARKEY of Colorado, Mr. WALZ, Ms. GIFFORDS, 

Mr. PIERLUISI, Mr. TONKO, Mr. QUIGLEY, Mr. LARSON of Connecticut, 

Mr. NADLER of New York, Mr. BARROW, Mr. CONNOLLY of Virginia, Ms. 

FUDGE, and Mr. TEAGUE

APRIL 27, 2009 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on January 22, 2009] 

A BILL 

To amend the Truth in Lending Act to establish fair and 

transparent practices relating to the extension of credit 

under an open end consumer credit plan, 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. 

4 This Act may be cited as the ‘‘Credit Cardholders’ Bill 

5 of Rights Act of 2009’’. 

6 SEC. 2. CREDIT CARDS ON TERMS CONSUMERS CAN REPAY. 

7 (a) RETROACTIVE RATE INCREASES AND UNIVERSAL

8 DEFAULT LIMITED.—Chapter 2 of the Truth in Lending 

9 Act (15 U.S.C. 1631 et seq.) is amended by inserting after 

10 section 127A the following new section: 


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1 ‘‘§ 127B. Additional requirements for credit card ac2 counts under an open end consumer cred3 it plan 

4 ‘‘(a) RETROACTIVE RATE INCREASES AND UNIVERSAL

5 DEFAULT LIMITED.— 

6 ‘‘(1) IN GENERAL.—Except as provided in sub7 section (b), no creditor may increase any annual per8 centage rate of interest applicable to the existing bal9 ance on a credit card account of the consumer under 

10 an open end consumer credit plan. 

11 ‘‘(2) EXISTING BALANCE DEFINED.—For pur12 poses of this subsection and subsections (b) and (c), 

13 the term ‘existing balance’ means the amount owed on 

14 a consumer credit card account as of the end of the 

15 14th day after the creditor provides notice of an in16 crease in the annual percentage rate in accordance 

17 with subsection (c). 

18 ‘‘(3) TREATMENT OF EXISTING BALANCES FOL19 LOWING RATE INCREASE.—If a creditor increases any 

20 annual percentage rate of interest applicable to the 

21 credit card account of a consumer under an open end 

22 consumer credit plan and there is an existing balance 

23 in the account to which such increase may not apply, 

24 the creditor shall allow the consumer to repay the ex25 isting balance using a method provided by the credVerDate Nov 24 2008 02:45 Apr 28, 2009 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H627.RH H627

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1 itor which is at least as beneficial to the consumer as 

2 1 of the following methods: 

3 ‘‘(A) An amortization period for the exist4 ing balance of at least 5 years starting from the 

5 date on which the increased annual percentage 

6 rate went into effect. 

7 ‘‘(B) The percentage of the existing balance 

8 that was included in the required minimum 

9 periodic payment before the rate increase cannot 

10 be more than doubled. 

11 ‘‘(4) LIMITATION ON CERTAIN FEES.—If— 

12 ‘‘(A) a creditor increases any annual per13 centage rate of interest applicable on a credit 

14 card account of the consumer under an open end 

15 consumer credit plan; and 

16 ‘‘(B) the creditor is prohibited by this sec17 tion from applying the increased rate to an ex18 isting balance, 

19 the creditor may not assess any fee or charge based 

20 solely on the existing balance.’’. 

21 (b) EXCEPTIONS TO THE AMENDMENT MADE BY SUB22 SECTION (a).—Section 127B of the Truth in Lending Act 

23 is amended by inserting after subsection (a) (as added by 

24 subsection (a)) the following new subsection: 

25 ‘‘(b) EXCEPTIONS.— 


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1 ‘‘(1) IN GENERAL.—A creditor may increase any 

2 annual percentage rate of interest applicable to the 

3 existing balance on a credit card account of the con4 sumer under an open end consumer credit plan only 

5 under the following circumstances: 

6 ‘‘(A) CHANGE IN INDEX.—The increase is 

7 due solely to the operation of an index that is 

8 not under the creditor’s control and is available 

9 to the general public. 

10 ‘‘(B) EXPIRATION OF PROMOTIONAL

11 RATE.—The increase is due solely to the expira12 tion of a promotional rate. 

13 ‘‘(C) FAILURE TO COMPLY WITH WORKOUT

14 PLAN.—The increase is due solely to the fact the 

15 consumer failed to comply with a negotiated 

16 workout plan with the creditor. 

17 ‘‘(D) PAYMENT NOT RECEIVED DURING 30- 

18 DAY GRACE PERIOD AFTER DUE DATE.—The in19 crease is due solely to the fact that any con20 sumer’s minimum payment has not been received 

21 within 30 days after the due date for such min22 imum payment. 

23 ‘‘(2) LIMITATION ON INCREASES DUE TO FAIL24 URE TO COMPLY WITH WORKOUT PLAN.—Notwith25 standing paragraph (1)(C), the annual percentage 


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1 rate in effect with respect to each category of trans2 actions for a credit card account under an open end 

3 consumer credit plan after the increase permitted 

4 under such subsection due to the failure of a consumer 

5 to comply with a workout plan may not exceed the 

6 annual percentage applicable to such category of 

7 transactions on the day before the effective date of the 

8 workout plan. 

9 ‘‘(3) STANDARDS REQUIRED.—The Board shall 

10 prescribe, by regulation, standards— 

11 ‘‘(A) for entering into any workout plan ap12 plicable to any credit card account under an 

13 open end consumer credit plan; and 

14 ‘‘(B) governing any such workout plan.’’. 

15 (c) ADVANCE NOTICE OF RATE INCREASES AND SIG16 NIFICANT CONTRACT CHANGES.—Section 127B of the Truth 

17 in Lending Act is amended by inserting after subsection 

18 (b) (as added by subsection (b)) the following new sub19 sections: 

20 ‘‘(c) ADVANCE NOTICE OF RATE INCREASES.— 

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

22 card account under an open end consumer credit 

23 plan, no increase in any annual percentage rate of 

24 interest (other than an increase described in sub25 section (b)(1)(A)) may take effect unless the creditor 


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1 provides a written notice to the consumer at least 45 

2 days before the increase takes effect which fully de3 scribes the changes in the annual percentage rate, in 

4 a complete and conspicuous manner, and the extent 

5 to which such increase would apply to an existing 

6 balance. 

7 ‘‘(2) LIMITATION ON RATE INCREASE NOTICES

8 WITHIN FIRST YEAR.—Except in the case of an in9 crease described in subparagraph (B), (C), or (D) of 

10 subsection (b)(1), no written notice under paragraph 

11 (1) of an increase in any annual percentage rate of 

12 interest on any credit card account under an open 

13 end consumer credit plan (for which notice is re14 quired under such paragraph) shall be effective before 

15 the end of the 1-year period beginning when the ac16 count is opened. 

17 ‘‘(d) ADVANCE NOTICE OF SIGNIFICANT CONTRACT

18 CHANGES.—In the case of any credit card account under 

19 an open end consumer credit plan, no significant change 

20 to the contract (such as any fee) may take effect unless the 

21 creditor provides a written notice of at least 45 days before 

22 the change takes effect which fully describes the changes in 

23 the contract, in a complete and conspicuous manner.’’. 

24 (d) CLERICAL AMENDMENT.—The table of sections for 

25 chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et 


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1 seq.) is amended by inserting after the item relating to sec2 tion 127A the following new item: 

‘‘127B. Additional requirements for credit card accounts under an open end consumer credit plan.’’. 

3 SEC. 3. ADDITIONAL PROVISIONS REGARDING ACCOUNT 

4 FEATURES, TERMS, AND PRICING. 

5 (a) DOUBLE CYCLE BILLING PROHIBITED.—Section 

6 127B of the Truth in Lending Act is amended by inserting 

7 after subsection (d) (as added by section 2(c)) the following 

8 new subsection: 

9 ‘‘(e) DOUBLE CYCLE BILLING.— 

10 ‘‘(1) IN GENERAL.—No finance charge may be 

11 imposed by a creditor with respect to any balance on 

12 a credit card account under an open end consumer 

13 credit plan that is based on balances for days in bill14 ing cycles preceding the most recent billing cycle as 

15 a result of the loss of any grace period. 

16 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 

17 apply so as to prohibit a creditor from— 

18 ‘‘(A) adjusting finance charges following the 

19 return of a payment for insufficient funds; or 

20 ‘‘(B) adjusting finance charges following 

21 resolution of a billing error dispute. 

22 ‘‘(3) GRACE PERIOD.—For purposes of this sub23 section, the term ‘grace period’ means, with respect to 

24 any credit card account under an open end consumer 


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1 credit plan, the time period, if any, provided by the 

2 creditor within which any credit extended under such 

3 credit plan for purchases of goods or services may be 

4 repaid by the consumer without incurring a finance 

5 charge.’’. 

6 (b) LIMITATIONS RELATING TO ACCOUNT BALANCES

7 ATTRIBUTABLE ONLY TO ACCRUED INTEREST.—Section 

8 127B is amended by inserting after subsection (e) (as added 

9 by subsection (a)) the following new subsection: 

10 ‘‘(f) LIMITATIONS RELATING TO ACCOUNT BALANCES

11 ATTRIBUTABLE ONLY TO ACCRUED INTEREST.— 

12 ‘‘(1) IN GENERAL.—If the outstanding balance 

13 on a credit card account under an open end consumer 

14 credit plan at the end of a billing period represents 

15 an amount attributable only to interest accrued dur16 ing the preceding billing period on an outstanding 

17 balance that was fully repaid during the preceding 

18 billing period— 

19 ‘‘(A) no fee may be imposed or collected in 

20 connection with such balance attributable only to 

21 interest before such end of the billing period; and 

22 ‘‘(B) any failure to make timely repay23 ments of the balance attributable only to interest 

24 before such end of the billing period shall not 

25 constitute a default on the account. 


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1 Such balance remains a legally binding debt obliga2 tion. 

3 ‘‘(2) RULE OF CONSTRUCTION.—Paragraph (1) 

4 shall not be construed as affecting— 

5 ‘‘(A) the consumer’s obligation to pay any 

6 accrued interest on a credit card account under 

7 an open end consumer credit plan; or 

8 ‘‘(B) the accrual of interest on the out9 standing balance on any such account in accord10 ance with the terms of the account and this 

11 title.’’. 

12 (c) ACCESS TO PAYOFF BALANCE INFORMATION.—Sec13 tion 127B of the Truth in Lending Act is amended by in14 serting after subsection (f) (as added by subsection (b)) the 

15 following new subsection: 

16 ‘‘(g) PAYOFF BALANCE INFORMATION.— 

17 ‘‘(1) IN GENERAL.—Each periodic statement pro18 vided by a creditor to a consumer with respect to a 

19 credit card account under an open end consumer 

20 credit plan shall contain the toll-free telephone num21 ber, Internet address, and website at which the con22 sumer may request the payoff balance on the account. 

23 ‘‘(2) SMALL ISSUERS.—Notwithstanding para24 graph (1), in the case of any credit card issuer which 

25 issues fewer than 50,000 credit cards in conjunction 


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1 with credit card accounts under open end consumer 

2 credit plans, each periodic statement provided by such 

3 a creditor to a consumer with respect to any such 

4 credit card account shall contain the toll-free tele5 phone number, Internet address, or website at which 

6 the consumer may request the payoff balance on the 

7 account.’’. 

8 (d) CONSUMER RIGHT TO REJECT CARD BEFORE NO9 TICE IS PROVIDED OF OPEN ACCOUNT.—Section 127B of 

10 the Truth in Lending Act is amended by inserting after 

11 subsection (g) (as added by subsection (c)) the following new 

12 subsection: 

13 ‘‘(h) CONSUMER RIGHT TO REJECT CARD BEFORE

14 NOTICE OF NEW ACCOUNT IS PROVIDED TO CONSUMER RE15 PORTING AGENCY.— 

16 ‘‘(1) IN GENERAL.—A creditor may not furnish 

17 any information to a consumer reporting agency (as 

18 defined in section 603) concerning the establishment 

19 of a newly opened credit card account under an open 

20 end consumer credit plan until the credit card has 

21 been used or activated by the consumer. 

22 ‘‘(2) RULE OF CONSTRUCTION.—Paragraph (1) 

23 shall not be construed as prohibiting a creditor from 

24 furnishing information about any application for a 

25 credit card account under an open end consumer 


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1 credit plan or any inquiry about any such account 

2 to a consumer reporting agency (as so defined).’’. 

3 (e) USE OF TERMS CLARIFIED.—Section 127B of the 

4 Truth in Lending Act is amended by inserting after sub5 section (h) (as added by subsection (d)) the following new 

6 subsection: 

7 ‘‘(i) USE OF TERMS.—The following requirements 

8 shall apply with respect to the terms of any credit card 

9 account under any open end consumer credit plan: 

10 ‘‘(1) ‘FIXED’ RATE.—The term ‘fixed’, when ap11 pearing in conjunction with a reference to the annual 

12 percentage rate or interest rate applicable with re13 spect to such account, may only be used to refer to an 

14 annual percentage rate or interest rate that will not 

15 change or vary for any reason over the period clearly 

16 and conspicuously specified in the terms of the ac17 count. 

18 ‘‘(2) PRIME RATE.—The term ‘prime rate’, when 

19 appearing in any agreement or contract for any such 

20 account, may only be used to refer to the bank prime 

21 rate published in the Federal Reserve Statistical Re22 lease on selected interest rates (daily or weekly), and 

23 commonly referred to as the H.15 release (or any suc24 cessor publication). 

25 ‘‘(3) DUE DATE.— 


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1 ‘‘(A) IN GENERAL.—Each periodic state2 ment for any such account shall contain a date 

3 by which the next periodic payment on the ac4 count must be made to avoid a late fee or be con5 sidered a late payment, and any payment re6 ceived by 5 p.m., local time at the location speci7 fied by the creditor for the receipt of payment, 

8 on such date shall be treated as a timely pay9 ment for all purposes. 

10 ‘‘(B) CERTAIN ELECTRONIC FUND TRANS11 FERS.—Any payment with respect to any such 

12 account made by a consumer online to the 

13 website of the credit card issuer or by telephone 

14 directly to the credit card issuer before 5 p.m., 

15 local time at the location specified by the cred16 itor for the receipt of payment, on any business 

17 day shall be credited to the consumer’s account 

18 that business day. 

19 ‘‘(C) PRESUMPTION OF TIMELY PAYMENT.— 

20 Any evidence provided by a consumer in the 

21 form of a receipt from the United States Postal 

22 Service or other common carrier indicating that 

23 a payment on a credit card account was sent to 

24 the issuer not less than 7 days before the due 

25 date contained in the periodic statement under 


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1 subparagraph (A) for such payment shall create 

2 a presumption that such payment was made by 

3 the due date, which may be rebutted by the cred4 itor for fraud or dishonesty on the part of the 

5 consumer with respect to the mailing date.’’. 

6 (f) PAYMENT ALLOCATIONS.—Section 127B of the 

7 Truth in Lending Act is amended by inserting after sub8 section (i) (as added by subsection (e)) the following new 

9 subsection: 

10 ‘‘(j) PAYMENT ALLOCATIONS.— 

11 ‘‘(1) IN GENERAL.—If 2 or more different annual 

12 percentage rates apply to different portions of an out13 standing balance on a credit card account under an 

14 open end consumer credit plan, the amount of any 

15 periodic payment in excess of the required minimum 

16 payment shall be applied using 1 of the following 

17 methods: 

18 ‘‘(A) HIGH-TO-LOW METHOD.—The excess 

19 amount is allocated first to the balance with the 

20 highest annual percentage rate and any remain21 ing portion is allocated to any other balance in 

22 descending order, based on the applicable annual 

23 percentage rate each portion of such balance 

24 bears, from the highest such rate to the lowest. 


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1 ‘‘(B) PRO RATA METHOD.—The excess 

2 amount is allocated among each of the portions 

3 of such balance which bear different rates of in4 terest in the same proportion as each such por5 tion of the outstanding balance bears to the total 

6 outstanding balance. 

7 ‘‘(2) CLARIFICATION RELATING TO CERTAIN DE8 FERRED INTEREST ARRANGEMENTS.—A creditor may 

9 allocate the entire amount paid by the consumer in 

10 excess of the required minimum periodic payment to 

11 a balance on which interest is deferred during the 2 

12 billing cycles immediately preceding the expiration of 

13 the period during which interest is deferred. 

14 ‘‘(3) PROHIBITION ON RESTRICTED GRACE PERI15 ODS UNDER CERTAIN CIRCUMSTANCES.—If, with re16 spect to any credit card account under an open end 

17 consumer credit plan, a creditor offers a time period 

18 in which to repay credit extended without incurring 

19 finance charges to cardholders who pay the balance in 

20 full, the creditor may not deny a consumer who takes 

21 advantage of a promotional rate balance or deferred 

22 interest rate balance offer with respect to such an ac23 count any such time period for repaying credit with24 out incurring finance charges.’’. 


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1 (g) TIMELY PROVISION OF PERIODIC STATEMENTS.— 

2 Section 127B of the Truth in Lending Act is amended by 

3 inserting after subsection (j) (as added by subsection (f)) 

4 the following new subsection: 

5 ‘‘(k) TIMELY PROVISION OF PERIODIC STATEMENTS.— 

6 Each periodic statement with respect to a credit card ac7 count under an open end consumer credit plan shall be sent 

8 by the creditor to the consumer not less than 21 calendar 

9 days before the due date identified in such statement for 

10 the next payment on the outstanding balance on such ac11 count, and section 163(a) shall be applied with respect to 

12 any such account by substituting ‘21’ for ‘fourteen’.’’. 

13 (h) DUE DATES.—Section 127B of the Truth in Lend14 ing Act is amended by inserting after subsection (k) (as 

15 added by subsection (g)) the following new subsection: 

16 ‘‘(l) DUE DATES.—If the date established by a creditor 

17 as the date on which a periodic payment on a credit card 

18 account under an open end consumer credit plan is due 

19 is a day on which mail is either not delivered to such cred20 itor or is not accepted by the creditor for processing on such 

21 day, the creditor may not treat the receipt by the creditor 

22 of any such periodic payment by mail as of the next busi23 ness day of the creditor as late for any purpose.’’. 


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1 SEC. 4. CONSUMER CHOICE WITH RESPECT TO OVER-THE2 LIMIT TRANSACTIONS. 

3 Section 127B of the Truth in Lending Act is amended 

4 by inserting after subsection (l) (as added by section 3(h)) 

5 the following new subsections: 

6 ‘‘(m) OPT-OUT OF CREDITOR AUTHORIZATION OF

7 OVER-THE-LIMIT TRANSACTIONS IF FEES ARE IMPOSED.— 

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

9 card account under an open end consumer credit plan 

10 under which an over-the-limit-fee may be imposed by 

11 the creditor for any extension of credit in excess of the 

12 amount of credit authorized to be extended under such 

13 account, the consumer may elect to prohibit the cred14 itor, with respect to such account, from completing 

15 any transaction involving the extension of credit, 

16 with respect to such account, in excess of the amount 

17 of credit authorized by notifying the creditor of such 

18 election in accordance with paragraph (2). 

19 ‘‘(2) NOTIFICATION BY CONSUMER.—A consumer 

20 shall notify a creditor under paragraph (1)— 

21 ‘‘(A) through the notification system main22 tained by the creditor under paragraph (4); or 

23 ‘‘(B) by submitting to the creditor a signed 

24 notice of election, by mail or electronic commu25 nication, on a form issued by the creditor for 

26 purposes of this subparagraph. 


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1 ‘‘(3) EFFECTIVENESS OF ELECTION.—An election 

2 by a consumer under paragraph (1) shall be effective 

3 beginning 3 business days after the creditor receives 

4 notice from the consumer in accordance with para5 graph (2) and shall remain effective until the con6 sumer revokes the election. 

7 ‘‘(4) NOTIFICATION SYSTEM.— 

8 ‘‘(A) IN GENERAL.—Each creditor that 

9 maintains credit card accounts under an open 

10 end consumer credit plan shall establish and 

11 maintain a notification system, including a toll12 free telephone number, Internet address, and 

13 website, which permits any consumer whose cred14 it card account is maintained by the creditor to 

15 notify the creditor of an election under this sub16 section in accordance with paragraph (2). 

17 ‘‘(B) SMALL ISSUERS.—Notwithstanding 

18 subparagraph (A), any credit card issuer which 

19 issues fewer than 50,000 credit cards in conjunc20 tion with credit card accounts under open end 

21 consumer credit plans shall establish and main22 tain a notification system, which shall include a 

23 toll-free telephone number, Internet address, or 

24 website, which permits any consumer whose cred25 it card account is maintained by the creditor to 


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1 notify the creditor of an election under this sub2 section in accordance with paragraph (2). 

3 ‘‘(5) ANNUAL NOTICE TO CONSUMERS OF AVAIL4 ABILITY OF ELECTION.—In the case of any credit card 

5 account under an open end consumer credit plan, the 

6 creditor shall include a notice, in clear and con7 spicuous language, of the availability of an election 

8 by the consumer under this paragraph as a means of 

9 avoiding over-the limit fees and a higher amount of 

10 indebtedness, and the method for providing such no11 tice— 

12 ‘‘(A) on the periodic statement required 

13 under section 127(b) with respect to such account 

14 at least once each calendar year; and 

15 ‘‘(B) on any such periodic statement which 

16 includes a notice of the imposition of an over17 the-limit fee during the period covered by the 

18 statement. 

19 ‘‘(6) NO FEES IF CONSUMER HAS MADE AN ELEC20 TION.—If a consumer has made an election under 

21 paragraph (1), no over-the-limit fee may be imposed 

22 on the account for any reason that has caused the out23 standing balance in the account to exceed the credit 

24 limit. 

25 ‘‘(7) REGULATIONS.— 


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1 ‘‘(A) IN GENERAL.—The Board shall issue 

2 regulations allowing for the completion of over3 the-limit transactions that for operational rea4 sons exceed the credit limit by a de minimis 

5 amount, even where the cardholder has made an 

6 election under paragraph (1). 

7 ‘‘(B) SUBJECT TO NO FEE LIMITATION.— 

8 The regulations prescribed under subparagraph 

9 (A) shall not allow for the imposition of any fee 

10 or any rate increase based on the permitted over11 the-limit transactions. 

12 ‘‘(n) OVER-THE-LIMIT FEE RESTRICTIONS.—With re13 spect to a credit card account under an open end consumer 

14 credit plan, an over-the-limit fee may be imposed only once 

15 during a billing cycle if, on the last day of such billing 

16 cycle, the credit limit on the account is exceeded, and an 

17 over-the-limit fee, with respect to such excess credit, may 

18 be imposed only once in each of the 2 subsequent billing 

19 cycles, unless the consumer has obtained an additional ex20 tension of credit in excess of such credit limit during any 

21 such subsequent cycle or the consumer reduces the out22 standing balance below the credit limit as of the end of such 

23 billing cycle. 

24 ‘‘(o) OVER-THE-LIMIT FEES PROHIBITED IN CON25 JUNCTION WITH CERTAIN CREDIT HOLDS.—NotwithVerDate Nov 24 2008 02:45 Apr 28, 2009 Jkt 079200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6203 E:\BILLS\H627.RH H627

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1 standing subsection (n), an over-the-limit fee may not be 

2 imposed if the credit limit was exceeded due to a hold unless 

3 the actual amount of the transaction for which the hold was 

4 placed would have resulted in the consumer exceeding the 

5 credit limit.’’. 

6 SEC. 5. STRENGTHEN CREDIT CARD INFORMATION COLLEC7 TION. 

8 Section 136(b) of the Truth in Lending Act (15 U.S.C. 

9 1646(b)) is amended— 

10 (1) in paragraph (1)— 

11 (A) by striking ‘‘COLLECTION REQUIRED.— 

12 The Board shall’’ and inserting ‘‘COLLECTION

13 REQUIRED.— 

14 ‘‘(A) IN GENERAL.—The Board shall’’. 

15 (B) by adding at the end the following new 

16 subparagraph: 

17 ‘‘(B) INFORMATION TO BE INCLUDED.—The 

18 information under subparagraph (A) shall in19 clude, for the relevant semiannual period, the fol20 lowing information with respect each creditor in 

21 connection with any consumer credit card ac22 count: 

23 ‘‘(i) A list of each type of transaction 

24 or event during the semiannual period for 

25 which 1 or more creditors has imposed a 


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1 separate interest rate upon a consumer 

2 credit card accountholder, including pur3 chases, cash advances, and balance trans4 fers. 

5 ‘‘(ii) For each type of transaction or 

6 event identified under clause (i)— 

7 ‘‘(I) each distinct interest rate 

8 charged by the card issuer to a con9 sumer credit card accountholder during 

10 the semiannual period; and 

11 ‘‘(II) the number of cardholders to 

12 whom each such interest rate was ap13 plied during the last calendar month of 

14 the semiannual period, and the total 

15 amount of interest charged to such 

16 accountholders at each such rate dur17 ing such month. 

18 ‘‘(iii) A list of each type of fee that 1 

19 or more of the creditors has imposed upon 

20 a consumer credit card accountholder dur21 ing the semiannual period, including any 

22 fee imposed for obtaining a cash advance, 

23 making a late payment, exceeding the credit 

24 limit on an account, making a balance 


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1 transfer, or exchanging United States dol2 lars for foreign currency. 

3 ‘‘(iv) For each type of fee identified 

4 under clause (iii), the number of account5 holders upon whom the fee was imposed 

6 during each calendar month of the semi7 annual period, and the total amount of fees 

8 imposed upon cardholders during such 

9 month. 

10 ‘‘(v) The total number of consumer 

11 credit card accountholders that incurred 

12 any finance charge or any other fee during 

13 the semiannual period. 

14 ‘‘(vi) The total number of consumer 

15 credit card accounts maintained by each 

16 creditor as of the end of the semiannual pe17 riod. 

18 ‘‘(vii) The total number and value of 

19 cash advances made during the semiannual 

20 period under a consumer credit card ac21 count. 

22 ‘‘(viii) The total number and value of 

23 purchases involving or constituting con24 sumer credit card transactions during the 

25 semiannual period. 


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1 ‘‘(ix) The total number and amount of 

2 repayments on outstanding balances on con3 sumer credit card accounts in each month of 

4 the semiannual period. 

5 ‘‘(x) The percentage of all consumer 

6 credit card accountholders (with respect to 

7 any creditor) who— 

8 ‘‘(I) incurred a finance charge in 

9 each month of the semiannual period 

10 on any portion of an outstanding bal11 ance on which a finance charge had 

12 not previously been incurred; and 

13 ‘‘(II) incurred any such finance 

14 charge at any time during the semi15 annual period. 

16 ‘‘(xi) The total number and amount of 

17 balances accruing finance charges during 

18 the semiannual period. 

19 ‘‘(xii) The total number and amount of 

20 the outstanding balances on consumer credit 

21 card accounts as of the end of such semi22 annual period. 

23 ‘‘(xiii) Total credit limits in effect on 

24 consumer credit card accounts as of the end 

25 of such semiannual period and the amount 


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1 by which such credit limits exceed the credit 

2 limits in effect as of the beginning of such 

3 period. 

4 ‘‘(xiv) Any other information related to 

5 interest rates, fees, or other charges that the 

6 Board deems of interest.’’; and 

7 (2) by adding at the end the following new para8 graph: 

9 ‘‘(5) REPORT TO CONGRESS.—The Board shall, 

10 on an annual basis, transmit to Congress and make 

11 public a report containing estimates by the Board of 

12 the approximate, relative percentage of income de13 rived by the credit card operations of depository insti14 tutions from— 

15 ‘‘(A) the imposition of interest rates on 

16 cardholders, including separate estimates for— 

17 ‘‘(i) interest with an annual percent18 age rate of less than 25 percent; and 

19 ‘‘(ii) interest with an annual percent20 age rate equal to or greater than 25 percent; 

21 ‘‘(B) the imposition of fees on cardholders; 

22 ‘‘(C) the imposition of fees on merchants; 

23 and 

24 ‘‘(D) any other material source of income, 

25 while specifying the nature of that income.’’. 


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1 SEC. 6. STANDARDS APPLICABLE TO INITIAL ISSUANCE OF 

2 SUBPRIME OR ‘‘FEE HARVESTER’’ CARDS. 

3 Section 127B of the Truth in Lending Act is amended 

4 by inserting after subsection (o) (as added by section 4) the 

5 following new subsection: 

6 ‘‘(p) STANDARDS APPLICABLE TO INITIAL ISSUANCE

7 OF SUBPRIME OR ‘FEE HARVESTER’ CARDS.— 

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

9 card account under an open end consumer credit plan 

10 the terms of which require the payment of any fee 

11 (other than any late fee, any over-the-limit fee, or any 

12 fee for a payment returned for insufficient funds) by 

13 the consumer in the first year the account is opened 

14 in an amount in excess of 25 percent of the total 

15 amount of credit authorized under the account when 

16 the account is opened, no payment of any fee (other 

17 than any late fee, any over-the-limit fee, or any fee 

18 for a payment returned for insufficient funds) may be 

19 made from the credit made available by the card. 

20 ‘‘(2) RULE OF CONSTRUCTION.—No provision of 

21 this subsection may be construed as authorizing any 

22 imposition or payment of advance fees otherwise pro23 hibited by any provision of law.’’. 


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1 SEC. 7. EXTENSIONS OF CREDIT TO UNDERAGE CON2 SUMERS. 

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

4 1637(c)) is amended by adding at the end the following new 

5 paragraph: 

6 ‘‘(8) EXTENSIONS OF CREDIT TO UNDERAGE CON7 SUMERS.— 

8 ‘‘(A) IN GENERAL.—No credit card may be 

9 knowingly issued to, or open end credit plan es10 tablished on behalf of, a consumer who has not 

11 attained the age of 18, unless the consumer is 

12 emancipated under applicable State law. 

13 ‘‘(B) RULE OF CONSTRUCTION.—For the 

14 purposes of determining the age of an applicant, 

15 the submission of a signed application by a con16 sumer stating that the consumer is over 18 shall 

17 be considered sufficient proof of age.’’. 

18 SEC. 8. PROHIBIT FEES FOR PAYMENT ON CREDIT CARD AC19 COUNTS BY ELECTRONIC FUND TRANSFERS. 

20 (a) IN GENERAL.—Section 127 of the Truth in Lend21 ing Act (15 U.S.C. 1637) is amended by adding at the end 

22 the following new subsection: 

23 ‘‘(i) PAYMENTS BY EFT.—In the case of a credit card 

24 account under an open end consumer credit plan, a creditor 

25 may not impose a fee based on the manner in which pay26 ment on the account is made, including a fee for making 


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1 any such payment by electronic fund transfer (as defined 

2 in section 903).’’. 

3 (b) EFFECTIVE DATE.—The amendment made by sub4 section (a) shall apply to all payments made after the date 

5 of the enactment of this Act and any fee imposed after such 

6 date in contravention of the amendment shall be promptly 

7 credited to the consumer’s account. 

8 SEC. 9. REPORT TO CONGRESS ON REDUCTIONS OF CON9 SUMER CREDIT CARD LIMITS BASED ON CER10 TAIN INFORMATION AS TO EXPERIENCE OR 

11 TRANSACTIONS OF THE CONSUMER. 

12 (a) REPORT ON CREDITOR PRACTICES REQUIRED.— 

13 Before the end of the 6-month period beginning on the date 

14 of the enactment of this Act, the Board of Governors of the 

15 Federal Reserve System, in consultation with the Comp16 troller of the Currency, the Director of the Office of Thrift 

17 Supervision, the Federal Deposit Insurance Corporation, 

18 the National Credit Union Administration Board, and the 

19 Federal Trade Commission, shall report to the Committee 

20 on Financial Services of the House of Representatives and 

21 the Committee on Banking, Housing, and Urban Affairs 

22 of the Senate on the extent to which, during the 3-year pe23 riod ending on such date of enactment, creditors have re24 duced credit limits or raised interest rates applicable to 


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1 credit card accounts under open end consumer credit plans 

2 based on— 

3 (1) the geographical location where a credit 

4 transaction with the consumer takes place or the iden5 tity of the merchant involved in the transaction; 

6 (2) the consumer’s credit transactions, including 

7 the type of credit transaction, the type of items pur8 chased in such transaction, the price of items pur9 chased in such transaction, any change in the type or 

10 price of items purchased in such transactions, and 

11 other data pertaining to the consumer’s use of such 

12 credit card account; and 

13 (3) the identity of the mortgage creditor which 

14 extended or holds the mortgage loan secured by the 

15 consumer’s primary residence. 

16 (b) OTHER INFORMATION.—The report required under 

17 subsection (a) shall also include— 

18 (1) the number and identity of creditors that 

19 have engaged in the practices described in subsection 

20 (a); 

21 (2) the extent to which the practices described in 

22 subsection (a) have an adverse impact on minority or 

23 low-income consumers; 

24 (3) any other relevant information regarding 

25 such practices; and 


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1 (4) recommendations to the Congress on regu2 latory or statutory changes that may be needed to re3 strict or prevent such practices. 

4 SEC. 10. EFFECTIVE DATE. 

5 (a) IN GENERAL.—Except as provided in subsection 

6 (c) for the period described in such subsection, the amend7 ments made by this Act shall apply to all credit card ac8 counts under open end consumer credit plans after the ear9 lier of— 

10 (1) the end of the 12-month period beginning on 

11 the date of the enactment of this Act; or 

12 (2) June 30, 2010. 

13 (b) REGULATIONS.—Except as provided in subsection 

14 (c) for the period described in such subsection, the Board 

15 of Governors of the Federal Reserve System, in consultation 

16 with the Comptroller of the Currency, the Director of the 

17 Office of Thrift Supervision, the Federal Deposit Insurance 

18 Corporation, the National Credit Union Administration 

19 Board, and the Federal Trade Commission, shall prescribe 

20 regulations, in final form, implementing the amendments 

21 made by this Act before the earlier of— 

22 (1) the end of the 5-month period beginning on 

23 the date of the enactment of this Act; or 

24 (2) June 1, 2010. 


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1 (c) INTERIM EFFECTIVE PERIOD FOR ADVANCE NO2 TICES OF RATE INCREASES.— 

3 (1) IN GENERAL.—During the period beginning 

4 90 days after the date of the enactment of this Act 

5 and ending on the effective date of all the amend6 ments under this Act as determined pursuant to sub7 section (a), no increase in any annual percentage rate 

8 of interest on any credit card account under an open 

9 end consumer credit plan (as such terms are defined 

10 in the Truth in Lending Act) may take effect unless 

11 the creditor provides a written notice to the consumer 

12 at least 45 days before the increase would otherwise 

13 take effect which fully describes the changes in the an14 nual percentage rate, in a complete and conspicuous 

15 manner, and the extent to which such increase would 

16 apply to an existing balance. 

17 (2) EXCEPTIONS.—A notice shall not be required 

18 under paragraph (1) for an increase in an annual 

19 percentage rate described in subparagraph (A), (B), 

20 or (C) of section 127B(b)(1) (as added by section 2). 

21 (3) REGULATIONS.—The Board of Governors of 

22 the Federal Reserve System shall prescribe regulations 

23 implementing the amendment referred to in para24 graph (1), for purposes of this subsection, before the 


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1 end of the 60-day period beginning on the date of the 

2 enactment of this Act. 


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Union Calendar No. 41 

111TH CONGRESS 

1ST SESSION H. R. 627 

[Report No. 111–88] 

A BILL 

To amend the Truth in Lending Act to establish 

credit plan, and for other purposes. tension of credit under an open end consumer fair and transparent practices relating to the exAPRIL 27, 2009 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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