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