By Gutierrez H.B. No. 2954
75R8025 LJR-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of revolving loan accounts and revolving
1-3 triparty accounts.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 15.02, Title 79, Revised Statutes
1-6 (Article 5069-15.02, Vernon's Texas Civil Statutes), is amended to
1-7 read as follows:
1-8 Art. 15.02. Maximum Rates of Interest. (a) A creditor may
1-9 charge and collect interest or finance charges under the contract
1-10 governing [on] an account on the outstanding unpaid indebtedness
1-11 owing on the customer's account at any daily, weekly, monthly,
1-12 annual, or other periodic percentage rate that the contract
1-13 provides, if the effective rate of simple interest does not exceed
1-14 25 percent per year. The rate of interest chargeable under the
1-15 contract for an account must be expressed in the contract governing
1-16 the account as a simple interest rate or rates. The repayment
1-17 terms under the contract governing an account extended to a
1-18 customer who is an individual may not include a provision under
1-19 which the customer is required to pay a balloon payment at
1-20 maturity. The adjustment of payment amounts, due to fluctuations
1-21 in the unpaid balance or the rate of interest, is not considered to
1-22 result in a balloon payment [either]
1-23 [(1)(i) on that portion of the average daily balance
1-24 not above $1,500 at an annual rate not above 18 percent; and (ii)
2-1 on that portion of the average daily balance above $1,500 and not
2-2 above $2,500 at an annual rate not above 12 percent; and (iii) on
2-3 that portion of the average daily balance above $2,500 at an annual
2-4 rate not above 10 percent; or]
2-5 [(2) on the entire average daily balance at the annual
2-6 rate of 14.4 percent].
2-7 (b) A creditor may charge one-twelfth of the applicable
2-8 annual rate under Section (a) of Article 15.02 of this chapter in
2-9 any billing cycle on the average daily balance of an account during
2-10 such billing cycle, if billing cycles may be considered equal under
2-11 Article 15.01(e) of this chapter.
2-12 (c) The maximum interest which may be contracted for and
2-13 collected under this article may be computed by a method other than
2-14 the average daily balance method as defined in this chapter if the
2-15 amount of interest computed by the other method will not exceed the
2-16 amount of interest computed under such average daily balance
2-17 method.
2-18 (d) Notwithstanding Sections (a) and (b) of this Article:
2-19 (1) if the outstanding balance of purchase obligations
2-20 under the contract is paid in full within 25 days after the end of
2-21 a prior billing cycle, a finance charge or interest may not be
2-22 imposed on a customer with respect to that balance for the period
2-23 from the end of the prior billing cycle to the date of the payment
2-24 in full; and
2-25 (2) if there is no purchase balance at the beginning
2-26 of a current billing cycle or if full payment of an outstanding
2-27 balance from a prior billing cycle is made under Subdivision (1) of
3-1 this section within two days after the end of the prior billing
3-2 cycle, a finance charge or interest may not be imposed on a
3-3 customer with respect to any amount added to the account during the
3-4 current billing cycle from the date of purchase to the end of the
3-5 current billing cycle.
3-6 (e) Notwithstanding Section (d) of this Article, the
3-7 contract governing an account may provide that a finance charge or
3-8 interest may be imposed from the date of purchase, if the contract
3-9 does not provide any charge permitted by Article 15.13 of this
3-10 chapter. [Article 1.04 of this Title or any other provision of
3-11 law, on any open-end account authorized under Article 3.15(4),
3-12 4.01(4), 15.01(k), or 15.01(l) of this Title, pursuant to which
3-13 credit card transactions as defined in Article 1.01(g) of this
3-14 Title may be made or in connection with which account a merchant
3-15 discount as defined in Article 1.01(h) of this Title is imposed or
3-16 received by the creditor, the rate of interest from time to time in
3-17 effect on such account is subject to and may not exceed the
3-18 quarterly ceiling from time to time in effect as computed pursuant
3-19 to Article 1.04 of this Title and as further limited by this
3-20 section, and the ceiling on such account is subject to quarterly
3-21 adjustment, which adjustment shall be made at the option of the
3-22 creditor either on the quarterly calendar dates set out in Article
3-23 1.04(d) of this Title or on the first day of the first billing
3-24 cycle of an account immediately following said quarterly calendar
3-25 dates. If a computation of the quarterly ceiling under Article
3-26 1.04(a)(2) of this Title is more than 22 percent per annum, the
3-27 ceiling under this provision shall be 22 percent per annum. If the
4-1 computation under Article 1.04(a)(2) of this Title is less than 14
4-2 percent per annum, the ceiling under this provision shall be 14
4-3 percent per annum. Notwithstanding any other provision of this
4-4 Title, a creditor charging a rate limited by this section shall not
4-5 be required to disclose any decreases which may from time to time
4-6 occur in the rate on its account.]
4-7 (f) As [(e) Except as provided in Section (d) of this
4-8 Article, as] an alternative to the rates authorized by Section (a)
4-9 of this Article, the parties may agree to any rate not exceeding a
4-10 rate authorized by Article 1.04 of this Title.
4-11 (g) [(f)] No fees shall be charged to or collected from the
4-12 customer in connection with an account subject to this chapter
4-13 unless authorized by statute.
4-14 SECTION 2. Chapter 15, Title 79, Revised Statutes (Article
4-15 5069-15.01 et seq., Vernon's Texas Civil Statutes), is amended by
4-16 adding Articles 15.12-15.17 to read as follows:
4-17 Art. 15.12. VARIATION IN PERIODIC PERCENTAGE RATE. (a) If
4-18 the contract governing the account so provides, the periodic
4-19 percentage rate of interest or finance charges under the account
4-20 may vary in accordance with an index that is made readily available
4-21 to and verifiable by the customer and is beyond the control of the
4-22 creditor.
4-23 (b) The periodic percentage rate, as varied, may be made
4-24 applicable to all outstanding unpaid indebtedness on or after the
4-25 effective date of the variation, including any indebtedness arising
4-26 out of purchases made or loans obtained before the variation.
4-27 (c) The periodic percentage rate, as varied, may not exceed
5-1 the maximum rate permitted under Article 15.02 of this chapter.
5-2 Art. 15.13. ADDITIONAL FEES AND CHARGES. (a)
5-3 Notwithstanding any other provision of this Title with respect to
5-4 an account, fees or charges may not be imposed on a customer in
5-5 addition to interest or finance charges as permitted by this
5-6 chapter, except that the creditor may impose one or more of the
5-7 following:
5-8 (1) an annual charge in any amount the contract
5-9 provides for the privileges made available to the customer under
5-10 the account;
5-11 (2) a transaction charge in the amount provided for in
5-12 the contract for each separate purchase or loan under the account;
5-13 and
5-14 (3) a minimum charge for each scheduled billing cycle
5-15 under the account during any portion of which there is an
5-16 outstanding unpaid indebtedness under the account.
5-17 (b) A fee or charge may not be charged to or collected from
5-18 a customer who is an individual, unless the contract governing the
5-19 account permits the fee to be charged.
5-20 (c) For purposes of this chapter, the additional charges
5-21 listed in Section (a) of this Article are not interest or finance
5-22 charges with respect to an account.
5-23 Art. 15.14. ACCOUNT AUTHORIZING BOTH LOANS AND PURCHASES.
5-24 (a) If the contract governing an account permitting the customer
5-25 to obtain both loans and purchases so provides, a creditor may
5-26 impose different terms on the indebtedness arising out of purchases
5-27 than on the indebtedness arising out of loans.
6-1 (b) Section (a) of this Article applies to all terms of the
6-2 contract governing the account, including terms governing:
6-3 (1) the periodic percentage rate used to compute
6-4 interest or finance charges;
6-5 (2) the method of computing the outstanding unpaid
6-6 indebtedness to which the periodic percentage rate is applied;
6-7 (3) the amounts of other charges; and
6-8 (4) the applicable repayment schedule.
6-9 Art. 15.15. ACCOUNT CONNECTED WITH DEMAND DEPOSIT ACCOUNT.
6-10 (a) If an account is offered and extended by a creditor that is a
6-11 depository institution in connection with a demand deposit account
6-12 or other transaction account maintained by the customer with the
6-13 creditor under a contract in which the creditor agrees to honor
6-14 checks, drafts, or other debits to the account by making extensions
6-15 of credit to the customer under the account, any charges
6-16 customarily imposed by the creditor under the terms governing that
6-17 demand deposit or other transaction account in the absence of any
6-18 associated contract with respect to an account subject to the
6-19 requirements of this chapter may continue to be imposed on that
6-20 demand deposit or other transaction account without specific
6-21 reference or incorporation in the contract governing the account.
6-22 (b) The account charges referred to by Section (a) of this
6-23 Article include:
6-24 (1) check charges;
6-25 (2) monthly maintenance charges;
6-26 (3) checkbook charges;
6-27 (4) charges for checks drawn in excess of an available
7-1 line of credit; and
7-2 (5) similar charges.
7-3 (c) The amount of any charge imposed on a demand deposit or
7-4 other transaction account described by Section (a) may be charged
7-5 to the account under the contract as a loan and may be included in
7-6 the outstanding unpaid indebtedness under the terms of the contract
7-7 governing the account, to the extent the balance in the demand
7-8 deposit or other transaction account is insufficient to pay the
7-9 charge.
7-10 Art. 15.16. DEFERRAL OF SCHEDULE PAYMENTS; DEFERRAL CHARGE.
7-11 A creditor may at any time allow a customer under a contract to
7-12 defer scheduled payment and charge the customer a deferral charge
7-13 agreed to by the creditor and the customer.
7-14 Art. 15.17. CHARGES FOR DEFAULT OR DELINQUENCY; APPLICATION
7-15 OF PAYMENTS TO DEBT. (a) If the contract governing an account
7-16 permits, a creditor may impose:
7-17 (1) a late or delinquency charge on payments or
7-18 portions of payments under the contract that are in default; and
7-19 (2) a charge not to exceed $10 for a payment made by a
7-20 check that is dishonored on the second presentment.
7-21 (b) Not more than one late or delinquency charge may be
7-22 imposed for any single scheduled payment or portion of a payment
7-23 regardless of the period during which it remains in default.
7-24 (c) Charges permitted by this Article are not interest or
7-25 finance charges under the account.
7-26 (d) For the purposes of this chapter, all payments by the
7-27 customer shall be applied to satisfaction of scheduled payments in
8-1 the order in which they become due.
8-2 SECTION 3. The importance of this legislation and the
8-3 crowded condition of the calendars in both houses create an
8-4 emergency and an imperative public necessity that the
8-5 constitutional rule requiring bills to be read on three several
8-6 days in each house be suspended, and this rule is hereby suspended,
8-7 and that this Act take effect and be in force from and after its
8-8 passage, and it is so enacted.