I 

110TH CONGRESS 

2D SESSION H. R. 5280 

To prevent unfair practices in credit card accounts, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 7, 2008 

Mr. LINCOLN DAVIS of Tennessee introduced the following bill; which was 

referred to the Committee on Financial Services 

A BILL 

To prevent unfair practices in credit card accounts, 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 ‘‘Stop Unfair Practices 

5 in Credit Cards Act of 2007’’. 

6 SEC. 2. STOP UNFAIR INTEREST RATES AND FEES. 

7 Section 163 of the Truth in Lending Act (15 U.S.C. 

8 1666b) is amended— 

9 (1) by striking the section title and all that fol10 lows through ‘‘If an open’’ and inserting the fol11 lowing: 


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1 ‘‘§ 163. Billing period and finance charges 

2 ‘‘(a) BILLING PERIOD.— 

3 ‘‘(1) FOURTEEN-DAY MINIMUM.—If an open’’; 

4 (2) by striking ‘‘(B) Subsection (a)’’ and insert5 ing the following: 

6 ‘‘(2) EXCUSABLE CAUSE.—Subsection (a)’’; and 

7 (3) by adding at the end the following: 

8 ‘‘(b) NO INTEREST CHARGE ON DEBT THAT IS PAID

9 ON TIME.—If an open end consumer credit plan provides 

10 a time period within which an obligor may repay any por11 tion of the credit extended without incurring an interest 

12 charge, and the obligor repays all or a portion of such 

13 credit within the specified time period, the creditor may 

14 not impose or collect an interest charge on the portion of 

15 the credit that was repaid within the specified time period. 

16 ‘‘(c) NO INTEREST ON DEBT THAT IS PAID ON TIME

17 AND IN FULL.—In an open end consumer credit plan, if 

18 a billing statement requests an obligor to repay within a 

19 specified time period all of the credit extended under the 

20 plan and related finance charges, and the obligor pays all 

21 of the specified amount within the specified time period, 

22 the creditor may not impose or collect an additional inter23 est charge on the amount that was paid in full and within 

24 the specified time period. 

25 ‘‘(d) LIMITS ON INTEREST RATE INCREASES.— 


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1 ‘‘(1) IN GENERAL.—With respect to a credit 

2 card account under an open end consumer credit 

3 plan, the creditor shall not increase the periodic rate 

4 of interest applicable to extensions of credit while 

5 such account remains open, unless— 

6 ‘‘(A) such increase is pursuant to the expi7 ration of an introductory rate which was dis8 closed under section 127(c)(6); 

9 ‘‘(B) such increase is pursuant to the ap10 plication of a variable rate which was disclosed 

11 under section 127(c)(1)(A)(i)(II); 

12 ‘‘(C) such increase is pursuant to the ap13 plication of a penalty rate which was disclosed 

14 under subsections (a)(4) and (c)(1)(A)(i) of sec15 tion 127; or 

16 ‘‘(D) the obligor has provided specific writ17 ten consent to such increase at the time such 

18 increase was proposed. 

19 ‘‘(2) LIMIT ON PENALTY INTEREST RATE.—If 

20 an obligor fails to repay an extension of credit in ac21 cordance with the terms of a credit card account 

22 under an open end consumer credit plan, and the 

23 creditor determines to apply a penalty rate, as de24 scribed in paragraph (1)(C), notwithstanding para25 graph (1)(D), such penalty rate may not, while such 


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1 account is open, exceed 7 percentage points above 

2 the interest rate that was in effect with respect to 

3 such account on the date immediately preceding the 

4 first such penalty increase for such account. 

5 ‘‘(e) INTEREST RATE INCREASES LIMITED TO FU6 TURE CREDIT EXTENSIONS.—With respect to a credit 

7 card account under an open end consumer credit plan, if 

8 the creditor increases the periodic interest rate applicable 

9 to an extension of credit under the account, such increased 

10 rate shall apply only to extensions of credit made on and 

11 after the date of such increase under the account, and any 

12 extension of credit under such account made before the 

13 date of such increase shall continue to incur interest at 

14 the rate that was in effect on the date prior to the date 

15 of the increase. 

16 ‘‘(f) NO INTEREST CHARGES ON FEES.—With re17 spect to a credit card account under an open end consumer 

18 credit plan, if the creditor imposes a transaction fee on 

19 the obligor, including a cash advance fee, late fee, over20 the-limit fee, or balance transfer fee, the creditor may not 

21 impose or collect interest with respect to such fee amount. 

22 ‘‘(g) FIXED CREDIT LIMIT.—With respect to each 

23 credit card account under an open end consumer credit 

24 plan, the creditor shall offer to the obligor the option of 

25 obtaining a fixed credit limit that cannot be exceeded, and 


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1 with respect to which any request for credit in excess of 

2 such fixed limit must be refused, without exception and 

3 without imposing an over-the-limit fee or other penalty on 

4 such obligor. 

5 ‘‘(h) OVER-THE-LIMIT FEE RESTRICTIONS.—With 

6 respect to a credit card account under an open end con7 sumer credit plan, an over-the-limit fee, as described in 

8 section 127(c)(1)(B)(iii)— 

9 ‘‘(1) may be imposed on the account only when 

10 an extension of credit obtained by the obligor causes 

11 the credit limit on such account to be exceeded, and 

12 may not be imposed when such credit limit is ex13 ceeded due to a penalty fee, such as a late fee or 

14 over-the-limit fee, that was added to the account bal15 ance by the creditor; and 

16 ‘‘(2) may be imposed only once during a billing 

17 cycle if, on the last day of such billing cycle, the 

18 credit limit on the account is exceeded, and no addi19 tional over-the-limit fee shall be imposed in a subse20 quent billing cycle with respect to such excess credit, 

21 unless the obligor has obtained an additional exten22 sion of credit in excess of such credit limit during 

23 such subsequent cycle. 

24 ‘‘(i) OTHER FEES.— 


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1 ‘‘(1) NO FEE TO PAY A BILLING STATEMENT.— 

2 With respect to a credit card account under an open 

3 end consumer credit plan, the creditor may not im4 pose a separate fee to allow the obligor to repay an 

5 extension of credit or finance charge, whether such 

6 repayment is made by mail, electronic transfer, tele7 phone authorization, or other means. 

8 ‘‘(2) REASONABLE CURRENCY EXCHANGE

9 FEE.—With respect to a credit card account under 

10 an open end consumer credit plan, the creditor may 

11 impose a fee for exchanging United States currency 

12 with foreign currency in an account transaction, only 

13 if— 

14 ‘‘(A) such fee reasonably reflects the actual 

15 costs incurred by the creditor to perform such 

16 currency exchange; 

17 ‘‘(B) the creditor discloses publicly its 

18 method for calculating such fee; and 

19 ‘‘(C) the primary Federal regulator of such 

20 creditor determines that the method for calcu21 lating such fee complies with this paragraph. 

22 ‘‘(j) ANNUAL AUDIT.—The primary Federal regu23 lator of a card issuer shall audit, on at least an annual 

24 basis, the credit card operations and procedures used by 

25 such issuer to ensure compliance with this section and secVerDate Aug 31 2005 04:50 Feb 09, 2008 Jkt 069200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5280.IH H5280

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1 tion 164, including by reviewing a sample of billing state2 ments to determine when they were mailed and received, 

3 and by reviewing a sample of credit card accounts to deter4 mine when and how payments and finance charges were 

5 applied. Such regulator shall promptly require the card 

6 issuer to take any corrective action needed to comply with 

7 this section.’’. 

8 SEC. 3. STOP UNFAIR APPLICATION OF CARD PAYMENTS. 

9 Section 164 of the Truth in Lending Act (15 U.S.C. 

10 1666c) is amended— 

11 (1) by striking the section heading and all that 

12 follows through ‘‘Payments’’ and inserting the fol13 lowing: 

14 ‘‘§ 164. Prompt and fair crediting of payments 

15 ‘‘(a) IN GENERAL.—Payments’’; and 

16 (2) by adding at the end the following: 

17 ‘‘(b) APPLICATION OF PAYMENT.—Upon receipt of a 

18 payment from a cardholder, the card issuer shall— 

19 ‘‘(1) apply the payment first to the card bal20 ance bearing the highest rate of interest, and then 

21 to each successive balance bearing the next highest 

22 rate of interest, until the payment is exhausted; and 

23 ‘‘(2) after complying with paragraph (1), apply 

24 the payment in the most effective way to minimize 

25 the imposition of any finance charge to the account. 


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1 ‘‘(c) CHANGES BY CARD ISSUER.—If a card issuer 

2 makes a material change in the mailing address, office, 

3 or procedures for handling cardholder payments, and such 

4 change causes a material delay in the crediting of a card5 holder payment made during the 60-day period following 

6 the date on which such change took effect, the card issuer 

7 may not impose any late fee or finance charge for a late 

8 payment on the credit card account to which such payment 

9 was credited.’’. 

10 SEC. 4. STOP DECEPTIVE DISCLOSURE. 

11 Section 127(e) of the Truth in Lending Act (15 

12 U.S.C. 1637(e)) is amended by adding at the end the fol13 lowing: 

14 ‘‘(3) INTEREST RATE LINKED TO PRIME

15 RATE.—If a credit card solicitation, application, 

16 agreement, or plan specifies use of a variable inter17 est rate established by reference to a ‘prime rate’, 

18 ‘prime interest rate’, or similar rate or index, the 

19 referenced rate shall be disclosed and defined as the 

20 bank prime loan rate posted by a majority of the top 

21 25 (by assets in domestic offices) United States 

22 chartered commercial banks, as published by the 

23 Board of Governors of the Federal Reserve System. 

24 To avoid an unfair or deceptive act or practice, a 


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1 card issuer may not use the term ‘prime rate’ to 

2 refer to any other type of interest rate.’’. 

3 SEC. 5. DEFINITIONS. 

4 Section 103 of the Truth in Lending Act (15 U.S.C. 

5 1602) is amended by adding at the end the following: 

6 ‘‘(cc) PRIMARY FEDERAL REGULATOR.— 

7 ‘‘(1) IN GENERAL.—The term ‘primary Federal 

8 regulator’, when used with respect to a card issuer 

9 that is a depository institution, has the same mean10 ing as the term ‘appropriate Federal banking agen11 cy’, under section 3 of the Federal Deposit Insur12 ance Act. 

13 ‘‘(2) AREAS OF RESPONSIBILITY.—For each 

14 card issuer within its regulatory jurisdiction, the pri15 mary Federal regulator shall be responsible for over16 seeing the credit card operations of the card issuer, 

17 ensuring compliance with the requirements of this 

18 title, and enforcing the prohibition against unfair or 

19 deceptive acts or practices.’’. 

20 SEC. 6. STRENGTHEN CREDIT CARD INFORMATION COL21 LECTION. 

22 Section 136(b) of the Truth in Lending Act (15 

23 U.S.C. 1646(b)) is amended— 

24 (1) in paragraph (1)— 


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1 (A) by striking ‘‘The Board shall’’ and in2 serting the following: 

3 ‘‘(A) IN GENERAL.—The Board shall’’; and 

4 (B) by adding at the end the following: 

5 ‘‘(B) INFORMATION TO BE INCLUDED.— 

6 The information under subparagraph (A) shall 

7 include, as of a date designated by the Board— 

8 ‘‘(i) a list of each type of transaction 

9 or event for which one or more of the card 

10 issuers has imposed a separate interest 

11 rate upon a cardholder, including pur12 chases, cash advances, and balance trans13 fers; 

14 ‘‘(ii) for each type of transaction or 

15 event identified under clause (i)— 

16 ‘‘(I) each distinct interest rate 

17 charged by the card issuer to a card18 holder, as of the designated date; and 

19 ‘‘(II) the number of cardholders 

20 to whom each such interest rate was 

21 applied during the calendar month im22 mediately preceding the designated 

23 date, and the total amount of interest 

24 charged to such cardholders at each 

25 such rate during such month; 


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1 ‘‘(iii) a list of each type of fee that 

2 one or more of the card issuers has im3 posed upon a cardholder as of the des4 ignated date, including any fee imposed for 

5 obtaining a cash advance, making a late 

6 payment, exceeding the credit limit on an 

7 account, making a balance transfer, or ex8 changing United States dollars for foreign 

9 currency; 

10 ‘‘(iv) for each type of fee identified 

11 under clause (iii), the number of card12 holders upon whom the fee was imposed 

13 during the calendar month immediately 

14 preceding the designated date, and the 

15 total amount of fees imposed upon card16 holders during such month; 

17 ‘‘(v) the total number of cardholders 

18 that incurred any interest charge or any 

19 fee during the calendar month immediately 

20 preceding the designated date; and 

21 ‘‘(vi) any other information related to 

22 interest rates, fees, or other charges that 

23 the Board deems of interest.’’; and 

24 (2) by adding at the end the following: 


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1 ‘‘(5) REPORT TO THE CONGRESS.—The Board 

2 shall, on an annual basis, transmit to the Congress 

3 and make public a report containing an assessment 

4 by the Board of the profitability of credit card oper5 ations of depository institutions. Such report shall 

6 include estimates by the Board of the approximate, 

7 relative percentage of income derived by such oper8 ations from— 

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

10 cardholders, including separate estimates for— 

11 ‘‘(i) interest with an annual percent12 age rate of less than 25 percent; and 

13 ‘‘(ii) interest with an annual percent14 age rate equal to or greater than 25 per15 cent; 

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

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

18 and 

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

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

21 SEC. 7. CONFORMING AMENDMENT. 

22 Section 8 of the Fair Credit and Charge Card Disclo23 sure Act of 1988 (15 U.S.C. 1637 note) is repealed. 


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1 SEC. 8. EFFECTIVE DATE. 

2 This Act and the amendments made by this Act shall 

3 take effect 180 days after the date of the enactment of 

4 this Act. 

Æ 


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