By Eiland H.B. No. 1277 75R4698 T A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to open-end credit. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Amend Chapter 15 of the Texas Credit Code on 1-5 revolving loan and revolving tri-party account as follows: 1-6 Amend Art. 5069 by deleting Art. 15.02 and substituting 1-7 therefor the following: 1-8 Art. 15.02. MAXIMUM RATES OF INTEREST. 1-9 (a) The maximum interest which may be contracted for and 1-10 collected under this article shall be 18 percent. A creditor may 1-11 charge one-twelfth of the applicable annual rate in any billing 1-12 cycle on the average daily balance of an account during such 1-13 billing cycle. 1-14 (b) The following fees and charges may be charged to or 1-15 collected from a customer in connection with an account subject to 1-16 this chapter: 1-17 (i) an annual fee not to exceed $50.00 per annum 1-18 (ii) a late charge not to exceed five percent of the 1-19 payment or $15.00, whichever is greater, after the payment 1-20 continues unpaid for ten days or more following the date such 1-21 payment is due including Sundays and holidays 1-22 (iii) a cash advance charge not to exceed two percent 1-23 of the cash advance or $2.00, whichever is greater. 1-24 (iv) a returned check fee calculated in the same 2-1 manner as returned check fees for merchants (see Art. 9022) 2-2 (v) a fee for accounts that exceed their credit limit 2-3 of $15.00 or five percent of the amount which exceeds the credit 2-4 limit, whichever is greater. 2-5 SECTION 2. Amend Chapter 15 of the Texas Credit Code by 2-6 adding a new Article 15.12 as follows: 2-7 Art. 15.12. VARIATION IN PERIODIC PERCENTAGE RATE. 2-8 (a) If the arrangement governing the account so provides, 2-9 the periodic percentage rate of interest or finance charges under 2-10 the account may vary in accordance with an index that is made 2-11 readily available to and verifiable by the customer and is beyond 2-12 the control of the creditor. 2-13 (b) The periodic percentage rate, as varied, may be made 2-14 applicable to all outstanding unpaid indebtedness on or after the 2-15 effective date of the variation, including any indebtedness arising 2-16 out of purchases made or loans obtained prior to the variation. 2-17 (c) The periodic percentage rate, as varied, may not exceed 2-18 the maximum rate permitted pursuant to Article 15.02 of this 2-19 chapter. 2-20 SECTION 3. Amend Chapter 15 of the Texas Credit Code by 2-21 adding a new Article 15.13 as follows: 2-22 Art. 15.13. ACCOUNT CONNECTED WITH DEMAND DEPOSIT ACCOUNT. 2-23 (a) If an account is offered and extended by a creditor 2-24 which is a depository institution in connection with a demand 2-25 deposit account or other transaction account maintained by the 2-26 customer with the creditor under an arrangement where the creditor 2-27 agrees to honor checks, drafts, or other debits to the account by 3-1 making extensions of credit to the customer under the account, any 3-2 charges customarily imposed by the creditor under the terms 3-3 governing said demand deposit or other transaction account in the 3-4 absence of any associated arrangement with respect to an account 3-5 subject to the requirements of this chapter may continue to be 3-6 imposed on said demand deposit or other transaction account without 3-7 specific reference or incorporation in the arrangement governing 3-8 the account. 3-9 (b) The account charges referred to in Subsection (a) of 3-10 this article include: 3-11 (1) check charges; 3-12 (2) monthly maintenance charges; 3-13 (3) checkbook charges; 3-14 (4) charges for checks drawn in excess of an available 3-15 line of credit; or 3-16 (5) any similar charges. 3-17 (c) The amount of any charge imposed on said demand deposit 3-18 or other transaction account may be charged to the account under 3-19 the arrangement as a loan and may be included in the outstanding 3-20 unpaid indebtedness under the terms of the arrangement governing 3-21 the account, to the extent the balance in the demand deposit or 3-22 other transaction account is insufficient to pay the charge. 3-23 SECTION 4. This Act takes effect September 1, 1997. 3-24 SECTION 5. The importance of this legislation and the 3-25 crowded condition of the calendars in both houses create an 3-26 emergency and an imperative public necessity that the 3-27 constitutional rule requiring bills to be read on three several 4-1 days in each house be suspended, and this rule is hereby suspended.