Senate File 349 - Introduced SENATE FILE 349 BY COMMITTEE ON COMMERCE (SUCCESSOR TO SSB 1127) A BILL FOR An Act relating to the calculation of finance charges for 1 consumer loans pursuant to open-end credit. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1436SV (2) 89 jda/rn

S.F. 349 Section 1. Section 537.2402, Code 2021, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 3. As an alternative to the charge 3 authorized by subsection 2, and not in addition to the charge 4 authorized by subsection 2, for each billing cycle a charge may 5 be made which is the sum of the charges determined by applying 6 a percentage to the actual balance of the open-end account on 7 each day in the billing cycle for which the charge is made. The 8 actual balance on a day is determined by adding to the unpaid 9 balance, if any, as of the beginning of that day all purchases 10 and other debits and deducting all payments and other credits 11 made or received as of that day. 12 EXPLANATION 13 The inclusion of this explanation does not constitute agreement with 14 the explanation’s substance by the members of the general assembly. 15 This bill relates to the calculation of finance charges for 16 consumer loans pursuant to open-end credit. 17 A consumer loan made pursuant to open-end credit is 18 considered a supervised loan if the finance charge associated 19 with the consumer loan exceeds the finance charge permitted 20 in Code chapter 535. Current law allows creditors that 21 are authorized to make supervised loans to contract for and 22 receive finance charges with respect to a loan pursuant to 23 open-end credit. Pursuant to the Iowa consumer credit code, 24 the amount of that finance charge may not exceed the greater 25 of the average daily balance of the open-end account in the 26 billing cycle for which the charge is made (average daily 27 balance limitation); the balance of the open-end account at 28 the beginning of the first day of the billing cycle (first day 29 of billing cycle limitation); or the median amount within a 30 specified range including the balance of the open-end account 31 not exceeding that permitted by the average daily balance 32 limitation or the first day of billing cycle limitation (median 33 amount limitation). 34 The bill adds that, as an alternative to the average daily 35 -1- LSB 1436SV (2) 89 jda/rn 1/ 2

S.F. 349 balance limitation, the first day of billing cycle limitation, 1 and the median amount limitation, for each billing cycle a 2 charge may be made which is the sum of the charges determined 3 by applying a percentage to the actual balance of the open-end 4 account on each day in the billing cycle for which the charge 5 is made. The bill establishes that the actual balance on 6 a day is determined by adding to the unpaid balance as of 7 the beginning of that day all purchases and other debits and 8 deducting all payments and other credits made or received as 9 of that day. 10 -2- LSB 1436SV (2) 89 jda/rn 2/ 2