15 U.S.C. § 1666i–1 — Limits on interest rate, fee, and finance charge increases applicable to outstanding balances
submitted 17 years ago by Pub. L. 90-321 to r/title-15-COMMERCE-AND-TRADE · 648 words · no verdicts yet
A creditor generally may not raise a rate, fee, or finance charge on an existing credit-card balance. Exceptions cover disclosed expiration rates, public-index variable rates, completed or failed hardship arrangements, and certain seriously late minimum payments. Repayment terms are protected.
(a) For an open-end credit*-card account, a creditor* may not increase an annual percentage rate, fee, or finance charge on an outstanding balance except as subsection (b) allows.
(b) The ban does not apply to: (1) a rate increase when a stated period ends if the creditor previously disclosed the period and later rate clearly, the increase does not exceed that rate, and it does not apply to earlier transactions; (2) a variable-rate increase made under an agreement tied to a public index outside the creditor’s control; (3) an increase after an obligor completes or fails to follow a workout or temporary-hardship arrangement, if the new rate, fee, or charge for a transaction category does not exceed the pre-arrangement amount and the arrangement terms, including increases, were clearly disclosed beforehand; or (4) an increase solely because a minimum payment was not received within 60 days after its due date, if the creditor explains the reason and six-month expiration in the required notice and ends the increase within six months when required payments are timely during that period.
(c) The creditor may not change the repayment terms for an outstanding balance, except it may offer: (1) repayment over at least five years beginning when the noticed increase takes effect; or (2) a required minimum payment using a balance percentage no more than twice the prior percentage, or a method no less beneficial.
(d) “Outstanding balance” means the amount owed at the end of the 14th day after the creditor gives the required rate, fee, or charge-increase notice.
In the case of any credit card* account under an open end consumer credit plan*, no creditor* may increase any annual percentage rate, fee, or finance charge applicable to any outstanding balance, except as permitted under subsection (b).
The prohibition under subsection (a) shall not apply to—
an increase in an annual percentage rate upon the expiration of a specified period of time, provided that—
prior to commencement of that period, the creditor disclosed to the consumer, in a clear and conspicuous manner, the length of the period and the annual percentage rate that would apply after expiration of the period;
the increased annual percentage rate does not exceed the rate disclosed pursuant to subparagraph (A); and
the increased annual percentage rate is not applied to transactions that occurred prior to commencement of the period;
an increase in a variable annual percentage rate in accordance with a credit* card agreement that provides for changes in the rate according to operation of an index that is not under the control of the creditor and is available to the general public;
an increase due to the completion of a workout or temporary hardship arrangement by the obligor or the failure of the obligor to comply with the terms of a workout or temporary hardship arrangement, provided that—
the annual percentage rate, fee, or finance charge applicable to a category of transactions following any such increase does not exceed the rate, fee, or finance charge that applied to that category of transactions prior to commencement of the arrangement; and
the creditor has provided the obligor, prior to the commencement of such arrangement, with clear and conspicuous disclosure of the terms of the arrangement (including any increases due to such completion or failure); or
an increase due solely to the fact that a minimum payment by the obligor has not been received by the creditor within 60 days after the due date for such payment, provided that the creditor shall—
include, together with the notice of such increase required under section 1637(i) of this title, a clear and conspicuous written statement of the reason for the increase and that the increase will terminate not later than 6 months after the date on which it is imposed, if the creditor receives the required minimum payments on time from the obligor during that period; and
terminate such increase not later than 6 months after the date on which it is imposed, if the creditor receives the required minimum payments on time during that period.
The creditor shall not change the terms governing the repayment of any outstanding balance, except that the creditor may provide the obligor with one of the methods described in paragraph (2) of repaying any outstanding balance, or a method that is no less beneficial to the obligor than one of those methods.
The methods described in this paragraph are—
an amortization period of not less than 5 years, beginning on the effective date of the increase set forth in the notice required under section 1637(i) of this title; or
a required minimum periodic payment that includes a percentage of the outstanding balance that is equal to not more than twice the percentage required before the effective date of the increase set forth in the notice required under section 1637(i) of this title.
For purposes of this section, the term “outstanding balance” means the amount owed on a credit card account under an open end consumer credit plan as of the end of the 14th day after the date on which the creditor provides notice of an increase in the annual percentage rate, fee, or finance charge in accordance with section 1637(i) of this title.
Source credit: (Pub. L. 90–321, title I, § 171, as added Pub. L. 111–24, title I, § 101(b)(2), May 22, 2009, 123 Stat. 1736.)
- 2009Enacted · Pub. L. 90-321 · 123 Stat. 1736
A history note hasn’t been published yet. The record shows enactment by Pub. L. 90-321 on 2009-05-22.
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