II 

110TH CONGRESS 

1ST SESSION S. 1395 

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

IN THE SENATE OF THE UNITED STATES 

MAY 15, 2007 

Mr. LEVIN (for himself and Mrs. MCCASKILL) introduced the following bill; 

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

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— 


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1 (1) by striking the section title and all that fol2 lows through ‘‘If an open’’ and inserting the fol3 lowing: 

4 ‘‘§ 163. Billing period and finance charges 

5 ‘‘(a) BILLING PERIOD.— 

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

7 (2) by striking ‘‘(B) Subsection (a)’’ and insert8 ing the following: 

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

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

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

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

13 a time period within which an obligor may repay any por14 tion of the credit extended without incurring an interest 

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

16 credit within the specified time period, the creditor may 

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

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

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

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

21 a billing statement requests an obligor to repay within a 

22 specified time period all of the credit extended under the 

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

24 of the specified amount within the specified time period, 

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1 est charge on the amount that was paid in full and within 

2 the specified time period. 

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

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

5 card account under an open end consumer credit 

6 plan, the creditor shall not increase the periodic rate 

7 of interest applicable to extensions of credit while 

8 such account remains open, unless— 

9 ‘‘(A) such increase is pursuant to the expi10 ration of an introductory rate which was dis11 closed under section 127(c)(6); 

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

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

15 ‘‘(C) such increase is pursuant to the ap16 plication of a penalty rate which was disclosed 

17 under subsections (a)(4) and (c)(1)(A)(i) of sec18 tion 127; or 

19 ‘‘(D) the obligor has provided specific writ20 ten consent to such increase at the time such 

21 increase was proposed. 

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

23 an obligor fails to repay an extension of credit in ac24 cordance with the terms of a credit card account 

25 under an open end consumer credit plan, and the 


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1 creditor determines to apply a penalty rate, as de2 scribed in paragraph (1)(C), notwithstanding para3 graph (1)(D), such penalty rate may not, while such 

4 account is open, exceed 7 percentage points above 

5 the interest rate that was in effect with respect to 

6 such account on the date immediately preceding the 

7 first such penalty increase for such account. 

8 ‘‘(e) INTEREST RATE INCREASES LIMITED TO FU9 TURE CREDIT EXTENSIONS.—With respect to a credit 

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

11 the creditor increases the periodic interest rate applicable 

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

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

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

15 extension of credit under such account made before the 

16 date of such increase shall continue to incur interest at 

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

18 of the increase. 

19 ‘‘(f) NO INTEREST CHARGES ON FEES.—With re20 spect to a credit card account under an open end consumer 

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

22 the obligor, including a cash advance fee, late fee, over23 the-limit fee, or balance transfer fee, the creditor may not 

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


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

2 credit card account under an open end consumer credit 

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

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

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

6 such fixed limit must be refused, without exception and 

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

8 such obligor. 

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

10 respect to a credit card account under an open end con11 sumer credit plan, an over-the-limit fee, as described in 

12 section 127(c)(1)(B)(iii)— 

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

14 an extension of credit obtained by the obligor causes 

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

16 may not be imposed when such credit limit is ex17 ceeded due to a penalty fee, such as a late fee or 

18 over-the-limit fee, that was added to the account bal19 ance by the creditor; and 

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

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

22 credit limit on the account is exceeded, and no addi23 tional over-the-limit fee shall be imposed in a subse24 quent billing cycle with respect to such excess credit, 

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1 sion of credit in excess of such credit limit during 

2 such subsequent cycle. 

3 ‘‘(i) OTHER FEES.— 

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

5 With respect to a credit card account under an open 

6 end consumer credit plan, the creditor may not im7 pose a separate fee to allow the obligor to repay an 

8 extension of credit or finance charge, whether such 

9 repayment is made by mail, electronic transfer, tele10 phone authorization, or other means. 

11 ‘‘(2) REASONABLE CURRENCY EXCHANGE

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

13 an open end consumer credit plan, the creditor may 

14 impose a fee for exchanging United States currency 

15 with foreign currency in an account transaction, only 

16 if— 

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

18 costs incurred by the creditor to perform such 

19 currency exchange; 

20 ‘‘(B) the creditor discloses publicly its 

21 method for calculating such fee; and 

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

23 creditor determines that the method for calcu24 lating such fee complies with this paragraph. 


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1 ‘‘(j) ANNUAL AUDIT.—The primary Federal regu2 lator of a card issuer shall audit, on at least an annual 

3 basis, the credit card operations and procedures used by 

4 such issuer to ensure compliance with this section and sec5 tion 164, including by reviewing a sample of billing state6 ments to determine when they were mailed and received, 

7 and by reviewing a sample of credit card accounts to deter8 mine when and how payments and finance charges were 

9 applied. Such regulator shall promptly require the card 

10 issuer to take any corrective action needed to comply with 

11 this section.’’. 

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

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

14 1666c) is amended— 

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

16 follows through ‘‘Payments’’ and inserting the fol17 lowing: 

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

19 ‘‘(a) IN GENERAL.—Payments’’; and 

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

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

22 payment from a cardholder, the card issuer shall— 

23 ‘‘(1) apply the payment first to the card bal24 ance bearing the highest rate of interest, and then 


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1 to each successive balance bearing the next highest 

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

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

4 the payment in the most effective way to minimize 

5 the imposition of any finance charge to the account. 

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

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

8 or procedures for handling cardholder payments, and such 

9 change causes a material delay in the crediting of a card10 holder payment made during the 60-day period following 

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

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

13 payment on the credit card account to which such payment 

14 was credited.’’. 

15 SEC. 4. STOP DECEPTIVE DISCLOSURE. 

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

17 U.S.C. 1637(e)) is amended by adding at the end the fol18 lowing: 

19 ‘‘(3) INTEREST RATE LINKED TO PRIME

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

21 agreement, or plan specifies use of a variable inter22 est rate established by reference to a ‘prime rate’, 

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

24 referenced rate shall be disclosed and defined as the 

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


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1 25 (by assets in domestic offices) United States 

2 chartered commercial banks, as published by the 

3 Board of Governors of the Federal Reserve System. 

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

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

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

7 SEC. 5. DEFINITIONS. 

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

9 1602) is amended by adding at the end the following: 

10 ‘‘(cc) PRIMARY FEDERAL REGULATOR.— 

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

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

13 that is a depository institution, has the same mean14 ing as the term ‘appropriate Federal banking agen15 cy’, under section 3 of the Federal Deposit Insur16 ance Act. 

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

18 card issuer within its regulatory jurisdiction, the pri19 mary Federal regulator shall be responsible for over20 seeing the credit card operations of the card issuer, 

21 ensuring compliance with the requirements of this 

22 title, and enforcing the prohibition against unfair or 

23 deceptive acts or practices.’’. 


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1 SEC. 6. STRENGTHEN CREDIT CARD INFORMATION COL2 LECTION. 

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

4 U.S.C. 1646(b)) is amended— 

5 (1) in paragraph (1)— 

6 (A) by striking ‘‘The Board shall’’ and in7 serting the following: 

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

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

10 ‘‘(B) INFORMATION TO BE INCLUDED.— 

11 The information under subparagraph (A) shall 

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

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

14 or event for which one or more of the card 

15 issuers has imposed a separate interest 

16 rate upon a cardholder, including pur17 chases, cash advances, and balance trans18 fers; 

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

20 event identified under clause (i)— 

21 ‘‘(I) each distinct interest rate 

22 charged by the card issuer to a card23 holder, as of the designated date; and 

24 ‘‘(II) the number of cardholders 

25 to whom each such interest rate was 

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1 mediately preceding the designated 

2 date, and the total amount of interest 

3 charged to such cardholders at each 

4 such rate during such month; 

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

6 one or more of the card issuers has im7 posed upon a cardholder as of the des8 ignated date, including any fee imposed for 

9 obtaining a cash advance, making a late 

10 payment, exceeding the credit limit on an 

11 account, making a balance transfer, or ex12 changing United States dollars for foreign 

13 currency; 

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

15 under clause (iii), the number of card16 holders upon whom the fee was imposed 

17 during the calendar month immediately 

18 preceding the designated date, and the 

19 total amount of fees imposed upon card20 holders during such month; 

21 ‘‘(v) the total number of cardholders 

22 that incurred any interest charge or any 

23 fee during the calendar month immediately 

24 preceding the designated date; and 


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1 ‘‘(vi) any other information related to 

2 interest rates, fees, or other charges that 

3 the Board deems of interest.’’; and 

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

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

6 on an annual basis, transmit to Congress and make 

7 public a report containing an assessment by the 

8 Board of the profitability of credit card operations 

9 of depository institutions. Such report shall include 

10 estimates by the Board of the approximate, relative 

11 percentage of income derived by such operations 

12 from— 

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

14 cardholders, including separate estimates for— 

15 ‘‘(i) interest with an annual percent16 age rate of less than 25 percent; and 

17 ‘‘(ii) interest with an annual percent18 age rate equal to or greater than 25 per19 cent; 

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

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

22 and 

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

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


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1 SEC. 7. CONFORMING AMENDMENT. 

2 Section 8 of the Fair Credit and Charge Card Disclo3 sure Act of 1988 (15 U.S.C. 1637 note) is repealed. 

4 SEC. 8. EFFECTIVE DATE. 

5 This Act and the amendments made by this Act shall 

6 become effective 180 days after the date of enactment of 

7 this Act. 

Æ 


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