Senate Study Bill 1127 - IntroducedA Bill ForAn Act 1relating to the calculation of finance charges for
2consumer loans pursuant to open-end credit.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1   Section 1.  Section 537.2402, Code 2021, is amended by adding
2the following new subsection:
3   NEW SUBSECTION.  3.  As an alternative to the charge
4authorized by subsection 2, and not in addition to the charge
5authorized by subsection 2, for each billing cycle a charge may
6be made which is the sum of the charges determined by applying
7a percentage not exceeding the percentage provided in section
8537.2403, subsection 1, to the actual balance of the open-end
9account on each day in the billing cycle for which the charge
10is made. The actual balance on a day is determined by adding to
11the unpaid balance, if any, as of the beginning of that day all
12purchases and other debits and deducting all payments and other
13credits made or received as of that day.
14EXPLANATION
15The inclusion of this explanation does not constitute agreement with
16the explanation’s substance by the members of the general assembly.
   17This bill relates to the calculation of finance charges for
18consumer loans pursuant to open-end credit.
   19A consumer loan made pursuant to open-end credit is
20considered a supervised loan if the finance charge associated
21with the consumer loan exceeds the finance charge permitted
22in Code chapter 535. Current law allows creditors that
23are authorized to make supervised loans to contract for and
24receive finance charges with respect to a loan pursuant to
25open-end credit. Pursuant to the Iowa consumer credit code,
26the amount of that finance charge may not exceed the greater
27of the average daily balance of the open-end account in the
28billing cycle for which the charge is made (average daily
29balance limitation); the balance of the open-end account at
30the beginning of the first day of the billing cycle (first day
31of billing cycle limitation); or the median amount within a
32specified range including the balance of the open-end account
33not exceeding that permitted by the average daily balance
34limitation or the first day of billing cycle limitation (median
35amount limitation).
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   1The bill adds that, as an alternative to the average daily
2balance limitation, the first day of billing cycle limitation,
3and the median amount limitation, for each billing cycle a
4charge may be made which is the sum of the charges determined
5by applying a percentage that does not exceed the percentage
6provided in Code section 537.2403, subsection 1, to the actual
7balance of the open-end account on each day in the billing
8cycle for which the charge is made. The bill establishes that
9the actual balance on a day is determined by adding to the
10unpaid balance as of the beginning of that day all purchases
11and other debits and deducting all payments and other credits
12made or received as of that day.
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