III 

109TH CONGRESS 

1ST SESSION S. 393 

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. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 16, 2005 

Mr. AKAKA (for himself, Mr. DURBIN, Mr. LEAHY, Mr. SARBANES, and Mr. 

SCHUMER) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

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.

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 Card Minimum 

5 Payment Warning Act of 2005’’. 
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1 SEC. 2. ENHANCED CONSUMER DISCLOSURES REGARDING 

2 MINIMUM PAYMENTS. 

3 Section 127(b) of the Truth in Lending Act (15 

4 U.S.C. 1637(b)) is amended by adding at the end the fol5 lowing: 

6 ‘‘(11)(A) Information regarding repayment of 

7 the outstanding balance of the consumer under the 

8 account, appearing in conspicuous type on the front 

9 of the first page of each such billing statement, and 

10 accompanied by an appropriate explanation, con11 taining— 

12 ‘‘(i) the words ‘Minimum Payment Warn13 ing: Making only the minimum payment will in14 crease the amount of interest that you pay and 

15 the time it will take to repay your outstanding 

16 balance.’; 

17 ‘‘(ii) the number of years and months 

18 (rounded to the nearest month) that it would 

19 take for the consumer to pay the entire amount 

20 of that balance, if the consumer pays only the 

21 required minimum monthly payments; 

22 ‘‘(iii) the total cost to the consumer, shown 

23 as the sum of all principal and interest pay24 ments, and a breakdown of the total costs in in25 terest and principal, of paying that balance in 

26 full if the consumer pays only the required min-
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1 imum monthly payments, and if no further ad2 vances are made; 

3 ‘‘(iv) the monthly payment amount that 

4 would be required for the consumer to eliminate 

5 the outstanding balance in 36 months if no fur6 ther advances are made; and 

7 ‘‘(v) a toll-free telephone number at which 

8 the consumer may receive information about ac9 cessing credit counseling and debt management 

10 services. 

11 ‘‘(B)(i) Subject to clause (ii), in making the dis12 closures under subparagraph (A) the creditor shall 

13 apply the interest rate in effect on the date on which 

14 the disclosure is made. 

15 ‘‘(ii) If the interest rate in effect on the date on 

16 which the disclosure is made is a temporary rate 

17 that will change under a contractual provision speci18 fying a subsequent interest rate or applying an index 

19 or formula for subsequent interest rate adjustment, 

20 the creditor shall apply the interest rate in effect on 

21 the date on which the disclosure is made for as long 

22 as that interest rate will apply under that contrac23 tual provision, and then shall apply the adjusted in24 terest rate, as specified in the contract. If the con25 tract applies a formula that uses an index that var-
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1 ies over time, the value of such index on the date on 

2 which the disclosure is made shall be used in the ap3 plication of the formula.’’. 

4 SEC. 3. ACCESS TO CREDIT COUNSELING AND DEBT MAN5 AGEMENT INFORMATION. 

6 (a) GUIDELINES REQUIRED.— 

7 (1) IN GENERAL.—Not later than 1 year after 

8 the date of enactment of this Act, the Board of Gov9 ernors of the Federal Reserve System and the Fed10 eral Trade Commission (in this section referred to 

11 as the ‘‘Board’’ and the ‘‘Commission’’, respectively) 

12 shall jointly, by rule, regulation, or order, issue 

13 guidelines for the establishment and maintenance by 

14 creditors of a toll-free telephone number for pur15 poses of the disclosures required under section 

16 127(b)(11) of the Truth in Lending Act, as added 

17 by this Act. 

18 (2) APPROVED AGENCIES.—Guidelines issued 

19 under this subsection shall ensure that referrals pro20 vided by the toll-free number include only those 

21 agencies approved by the Board and the Commission 

22 as meeting the criteria under this section. 

23 (b) CRITERIA.—The Board and the Commission shall 

24 only approve a nonprofit budget and credit counseling 

25 agency for purposes of this section that— 
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1 (1) demonstrates that it will provide qualified 

2 counselors, maintain adequate provision for safe3 keeping and payment of client funds, provide ade4 quate counseling with respect to client credit prob5 lems, and deal responsibly and effectively with other 

6 matters relating to the quality, effectiveness, and fi7 nancial security of the services it provides; 

8 (2) at a minimum— 

9 (A) is registered as a nonprofit entity 

10 under section 501(c) of the Internal Revenue 

11 Code of 1986; 

12 (B) has a board of directors, the majority 

13 of the members of which— 

14 (i) are not employed by such agency; 

15 and 

16 (ii) will not directly or indirectly ben17 efit financially from the outcome of the 

18 counseling services provided by such agen19 cy; 

20 (C) if a fee is charged for counseling serv21 ices, charges a reasonable and fair fee, and pro22 vides services without regard to ability to pay 

23 the fee; 

24 (D) provides for safekeeping and payment 

25 of client funds, including an annual audit of the 
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1 trust accounts and appropriate employee bond2 ing; 

3 (E) provides full disclosures to clients, in4 cluding funding sources, counselor qualifica5 tions, possible impact on credit reports, any 

6 costs of such program that will be paid by the 

7 client, and how such costs will be paid; 

8 (F) provides adequate counseling with re9 spect to the credit problems of the client, in10 cluding an analysis of the current financial con11 dition of the client, factors that caused such fi12 nancial condition, and how such client can de13 velop a plan to respond to the problems without 

14 incurring negative amortization of debt; 

15 (G) provides trained counselors who— 

16 (i) receive no commissions or bonuses 

17 based on the outcome of the counseling 

18 services provided; 

19 (ii) have adequate experience; and 

20 (iii) have been adequately trained to 

21 provide counseling services to individuals 

22 in financial difficulty, including the mat23 ters described in subparagraph (F); 

24 (H) demonstrates adequate experience and 

25 background in providing credit counseling; 
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1 (I) has adequate financial resources to pro2 vide continuing support services for budgeting 

3 plans over the life of any repayment plan; and 

4 (J) is accredited by an independent, na5 tionally recognized accrediting organization.

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