Washington, D.C. -  Today the House of Representatives approved an amendment offered by Congressmen David Price (D-NC) and Brad Miller (D-NC) to H.R. 627, the Credit Cardholder’s Bill of Rights.  The overall bill subsequently passed the House by a vote of 357 to 70.  Price’s amendment is designed to help consumers avoid crippling credit card debt by providing additional information on the pitfalls of making only the minimum payment. 

American families are carrying record levels of debt.  Revolving credit – most of which is credit card debt – has quadrupled since 1990.  In far too many cases, this debt becomes unmanageable, and the resulting impacts are detrimental to both individual consumers and our society at large.  As debt increases, interest and penalty fees eat up more and more of the household budget.  Families have to dip into their savings, and their dreams of homeownership, college education for their children, and a secure retirement dissolve.  When consumers find that they cannot pay back their debts at all, credit card companies pass the costs on to other cardholders in the form of higher interest rates. 

“Minimum payment practices are at best deceptive and at worst abusive,” said Price.  “The personalized, timely disclosures required by the Price-Miller amendment will provide a wake-up call for over-extended consumers, helping them avoid falling into the trap of perpetual debt.” 

“We want to make sure that credit card users are well-informed, in order to make the best possible financial decisions for themselves and their families,” said Miller. 

Consumers can break the destructive debt cycle by making informed decisions about managing their credit, and the Price-Miller amendment would provide the tools to do so.  The amendment would ensure that consumers will receive personalized disclosures at least once per quarter that show the total cost, including interest payments, of paying only monthly minimum payments on their credit card balance.  The quarterly disclosures would also include assessments of the monthly payment they must make to pay off their balance in 12, 24, and 36 months.  The amendment also requires that consumers receive a general warning that making only the minimum payment will increase the total amount of interest they pay and have access to information on credit counseling and debt management services via a toll-free telephone number. 

The Price-Miller amendment is based on stand-alone legislation Price has introduced since 2005 and reflects key elements of President Obama’s recently announced plan to help protect credit cardholders.  Reps. Jim Moran (D-VA), Mike Quigley (D-IL), Nita Lowey (D-NY), Bart Stupak (D-MI), and Betty Sutton (D-OH) joined Price and Miller as cosponsors. 

The full text of the amendment is copied below. 

AMENDMENT TO H.R. 627, AS REPORTED
OFFERED BY MR. PRICE OF NORTH CAROLINA, ET AL

After section 8, insert the following new section (and redesignate subsequent sections accordingly):

SEC. 9. ENHANCED MINIMUM PAYMENT DISCLOSURES.
Paragraph (11) of section 127(b) of the Truth inLending Act (15 U.S.C. 1637(b)(11)) is amended to readas follows:
‘‘(11) MINIMUM PAYMENT DISCLOSURES.—

‘‘(A) MINIMUM PAYMENT WARNING.—A written statement in the following form: ‘Minimum Payment Warning: Making only the minimum payment will increase the interest you pay and the time it takes to repay your balance.’.

‘‘(B) INFORMATION ON OUTSTANDING BALANCE.—Not less than once per calendar quarter, such billing statement shall also include repayment information that would apply to the outstanding balance of the consumer under the credit plan, including—
‘‘(i) the number of months (rounded to the nearest month) that it would take to pay the entire amount of that balance, if the consumer pays only the required minimum monthly payments and if no further advances are made;
‘‘(ii) the total cost to the consumer, including interest payments, of paying that balance in full, if the consumer pays only the required minimum monthly payments and if no further advances are made;
‘‘(iii) the monthly payment amount that would be required for the consumer to eliminate the outstanding balance in 12 months, 24 months, and 36 months, if no further advances are made, and the total cost to the consumer, including interest and principal payments, of paying that balance in full if the consumer pays the balance over 12, 24, or 36 months, respectively; and
‘‘(iv) a toll-free telephone number at which the consumer may receive information about accessing credit counseling and debt management services.

‘‘(C) EXCEPTION TO REQUIREMENTS OF SUBSECTION (B).—The quarterly disclosure requirements in subsection (B) shall not apply with respect to—
‘‘(i) a calendar quarter if, in the consecutive billing cycles preceding the end of such quarter, a consumer has paid the entire balance of the bill in full;
‘‘(ii) a calendar quarter if, at the end of the calendar quarter, a consumer has an outstanding credit balance of zero or has a positive credit; or
‘‘(iii) any class of consumers for which the Board has determined will not benefit substantially from additional disclosures.

‘‘(D) APPLICABLE RATES TO BE USED IN DISCLOSURES.—
‘‘(i) IN GENERAL.—Subject to clause (ii), in making the disclosures under subparagraph (B), the creditor shall apply the interest rate or rates in effect on the date on which the disclosure is made until the date on which the balance would be paid in full.
‘‘(ii) SPECIAL RULE IN CASE OF TEMPORARY RATE.—If the interest rate in effect on the date on which the disclosure is made is a temporary rate that will change under a contractual provision applying an index or formula for subsequent interest rate adjustment, the creditor shall apply the interest rate in effect on the date on which the disclosure is made for as long as that interest rate will apply under that contractual provision, and then apply an interest rate based on the index or formula in effect on the applicable billing date.

‘‘(E) FORM AND PROMINENCE OF DISCLOSURE.—All of the information described in subparagraph (B) shall—
‘‘(i) be disclosed in the form and manner which the Board shall prescribe, by regulation, and in a manner that avoids duplication; and
‘‘(ii) be placed in a conspicuous and prominent location on the billing statement in conspicuous typeface.

‘‘(F) TABULAR FORMAT.—In the regulations prescribed under subparagraph (D), the Board shall require that the disclosure of such information shall be in the form of a table that—
‘‘(i) contains clear and concise headings for each item of such information; and
‘‘(ii) provides a clear and concise form stating each item of information required to be disclosed under each such heading.

‘‘(G) LOCATION AND ORDER OF TABLE.— In prescribing the form of the table under subparagraph (E), the Board shall require that—
‘‘(i) all of the information in the table, and not just a reference to the table, be placed on the billing statement, as required by this paragraph; and
‘‘(ii) the items required to be included in the table shall be listed in the order in which such items are described in subparagraph (B).

‘‘(H) SUBSTITUTION OF TERMINOLOGY.— In prescribing the form of the table under subparagraph (D), the Board may employ terminology which is different than the terminology used in subparagraph (B), if such terminology is more easily understood and conveys substan tially the same meaning.

‘‘(I) ‘ROUNDING’ REGULATIONS.—For purposes of determining whether an error in the disclosures required by subparagraph (B) constitutes a legal cause of action against a creditor or any other party, the standard referred to under the heading ‘Rounding assumed payments, current balance and interest charges to the nearest cent’ in the publication by the Board in the Federal Register (74 F.R. 5385) on January 29, 2009, of the final regulation revising part 226 of title 12 of the Code of Federal Regulations (Regulation Z), or a standard that affords substantially similar protections as determined by the Board, shall apply for purposes of the determination with regard to such disclosures.’’