10 Percent Credit Card Interest Rate Cap Act
Officially: “10 Percent Credit Card Interest Rate Cap Act” Read the full text
What it does
Read it in plain language
1Short title
This section would say that the Act can be called the "10 Percent Credit Card Interest Rate Cap Act."
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1. Short title This Act may be cited as the 10 Percent Credit Card Interest Rate Cap Act .
2Cap on credit card interest rates
This section would add a new subsection to section 107 of the Truth in Lending Act. The annual percentage rate charged on credit extended through a credit card could not be more than 10 percentage points, counting all finance charges together. Other fees that do not count as finance charges under section 106(a) could not be used to get around that 10 percent cap, and the total of those other fees could not be more than the total finance charges charged. If a lender knowingly charged, took, received, or reserved a rate or fee above the 10 percent limit, that would count as a violation of the Truth in Lending Act, and the lender would forfeit all of the interest that the note, bill, or other evidence of the debt carries or that the borrower agreed to pay on it. A borrower who paid a rate or fee above the limit, or that borrower's legal representative, could sue the lender to recover all of the interest, finance charges, or fees paid, as long as the lawsuit is filed within 2 years after the last time the overcharge was collected. Any creditor who violated the new 10 percent cap would be subject to the civil liability provisions in section 130 of the Truth in Lending Act. This section would also state that nothing in section 107 overrides a state law that gives consumers more protection than this federal cap does. This section would further amend section 130(a) of the Truth in Lending Act so that its civil liability provisions also cover violations of the new 10 percent cap, in addition to the rest of the Act's requirements. Finally, this section would set a sunset: starting January 1, 2031, the new 10 percent cap and the state-law protection clause would be removed from section 107, and the reference to the cap would be removed from section 130(a), ending the cap and its enforcement provisions on that date.
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2. Cap on credit card interest rates (a) In general Section 107 of the Truth in Lending Act ( 15 U.S.C. 1606 ) is amended by adding at the end the following: (f) (1) The annual percentage rate applicable to an extension of credit obtained by use of a credit card may not exceed 10 percentage points, inclusive of all finance charges. (2) Any fees that are not considered finance charges under section 106(a) may not be used to evade the limitations of paragraph (1), and the total sum of such fees may not exceed the total amount of finance charges assessed. (3) The taking, receiving, reserving, or charging of a credit card annual percentage rate or fee greater than that permitted under this subsection, when knowingly done, shall be deemed a violation of this title, and a forfeiture of the entire interest which the note, bill, or other evidence of the obligation carries with it, or which has been agreed to be paid thereon. (4) If a credit card annual percentage rate or fee greater than that permitted under this subsection has been paid, the person by whom it has been paid, or the legal representative thereof, may, by bringing an action not later than 2 years after the date on which the usurious collection was last made, recover back from the lender in an action in the nature of an action of debt, the entire amount of interest, finance charges, or fees paid. (5) Any creditor who violates this subsection shall be subject to the provisions of section 130. (g) Nothing in this section may be construed to preempt any provision of State law that provides greater protection to consumers than is provided under this section. . (b) Technical and conforming amendment Section 130(a) of the Truth in Lending Act ( 15 U.S.C. 1640(a) ) is amended, in the matter preceding paragraph (1), by inserting section 107(f), before this chapter . (c) Sunset (1) In general The Truth in Lending Act ( 15 U.S.C. 1601 et seq. ) is amended— (A) in section 107 ( 15 U.S.C. 1606 ), by striking subsections (f) and (g); and (B) in section 130(a) ( 15 U.S.C. 1640(a) ), in the matter preceding paragraph (1), by striking section 107(f), . (2) Effective date The amendments made by paragraph (1) shall take effect on January 1, 2031.
Where it is
In the House.