CHAPTER 346. REVOLVING CREDIT ACCOUNTS - Texas Statutes

FINANCE CODE

TITLE 4. REGULATION OF INTEREST, LOANS, AND FINANCED TRANSACTIONS

SUBTITLE B. LOANS AND FINANCED TRANSACTIONS

CHAPTER 346. REVOLVING CREDIT ACCOUNTS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 346.001. DEFINITIONS. In this chapter:

(1) "Billing cycle" means the interval between periodic billing

statements.

(2) "Credit card" means a card, confirmation, or identification

or check or other written request by which a customer obtains

access to a revolving credit account.

(3) "Creditor" means an authorized lender who directly or

through another who honors a credit card issued by the person,

extends credit, including money loaned, to a customer under an

agreement that provides for the use of a credit card.

(4) "Customer" means a person who has accepted a revolving

credit account.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 346.002. AVERAGE DAILY BALANCE. (a) The average daily

balance of a revolving credit account is computed by:

(1) adding all of the ending balances in the account during each

day of a billing cycle; and

(2) dividing the total under Subdivision (1) by the number of

days in the billing cycle.

(b) For purposes of Subsection (a), a day's ending balance is

computed by:

(1) adding the previous day's ending balance and the amount of

each loan, lease of goods, or purchase of goods or services

posted to the account on the day for which the ending balance is

being computed; and

(2) subtracting from the result under Subdivision (1) each

credit or payment posted to the account on the day for which the

ending balance is being computed.

(c) A day's ending balance may not include interest.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 346.003. REVOLVING CREDIT ACCOUNTS. (a) A revolving

credit account is an open-end account:

(1) that is established by a creditor for a customer under a

written agreement between the creditor and the customer;

(2) that the customer accepts by using the account; and

(3) under which:

(A) the unpaid balance of and interest on the extensions of

credit are debited to the account;

(B) interest is not precomputed but may be computed on the

balances of the account outstanding from time to time;

(C) the customer may defer payment of any part of the balance of

the account; and

(D) the customer may obtain from the creditor one or more

extensions of credit as described by Subsection (b) or (c).

(b) A revolving loan account is a revolving credit account under

which a customer may obtain a loan from a creditor.

(c) A revolving triparty account is a revolving credit account

under which:

(1) a customer may use a credit card to:

(A) obtain a loan from a creditor, with the advance made by the

creditor or a person participating with the creditor;

(B) lease goods from a person participating with the creditor;

or

(C) purchase goods or services from a person participating with

the creditor;

(2) the creditor is obligated to pay the participating person;

and

(3) the customer is obligated to pay the creditor the amount of

the loan or cost of the lease or purchase.

(d) Interest may be computed on the balance of the account from

time to time.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 346.004. APPLICATION OF CHAPTER TO REVOLVING CREDIT

ACCOUNTS. (a) Unless the contract for the account provides

otherwise, this chapter applies to a revolving credit account

described by Section 346.003 if the loan or extension of credit

is primarily for personal, family, or household use.

(b) Unless the contract for the account provides that this

chapter applies, this chapter does not apply to a revolving

credit account described by Section 346.003 if the loan or

extension of credit is for business, commercial, investment, or

similar purposes.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2005, 79th Leg., Ch.

1018, Sec. 2.17, eff. September 1, 2005.

Sec. 346.005. APPLICATION OF OTHER CODE PROVISIONS. (a) A

revolving credit account is subject to Chapters 303 and 349 but

is not subject to another chapter of this title unless

specifically provided by this chapter.

(b) A creditor in a revolving credit account under this chapter

for personal, family, or household use must hold a license under

Chapter 342, unless the person is not required to obtain a

license under Section 342.051.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2003, 78th Leg., ch. 887, Sec. 1, eff. Sept. 1,

2003.

SUBCHAPTER B. INTEREST CHARGE AND FEES

Sec. 346.101. MAXIMUM INTEREST RATE. (a) A revolving credit

account may provide for interest on an account at an annual rate

that does not exceed the greater of:

(1) 18 percent a year; or

(2) the applicable alternative rate ceiling under Chapter 303.

(b) A revolving credit account may provide for interest computed

under a method other than the average daily balance method if the

amount of interest computed under that method does not exceed the

amount of interest computed under the average daily balance

method.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1348, Sec. 1, eff. Sept. 1,

1999; Acts 2003, 78th Leg., ch. 887, Sec. 2, eff. Sept. 1, 2003.

Sec. 346.102. PERMISSIBLE INTEREST RATE FOR BILLING CYCLE. (a)

A revolving credit account that provides for equal billing cycles

may provide for interest for a billing cycle at the rate equal to

one-twelfth of the applicable annual interest rate on the average

daily balance of the account during that billing cycle.

(b) In any 12-month period, billing cycles are considered to be

equal if:

(1) the number of billing cycles in the period does not exceed

12; and

(2) the difference between the length of the longest and the

shortest billing cycles in the period does not exceed eight days.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 346.103. FEES. (a) The following fees may be charged to

or collected from a customer in connection with an account under

this chapter:

(1) an annual fee not to exceed:

(A) $50 a year on an account with a credit limit of $5,000 or

less;

(B) $75 a year on an account with a credit limit exceeding

$5,000 but not exceeding $25,000; and

(C) $125 a year on an account with a credit limit exceeding

$25,000;

(2) a late charge not to exceed the lesser of $15 or five

percent of the payment due after the payment continues unpaid for

10 days or more after the date the payment is due, including

Sundays and holidays;

(3) a cash advance charge not to exceed the greater of $2 or two

percent of the cash advance;

(4) a returned check fee as provided for a loan agreement under

Chapter 342 by Section 1, Chapter 617, Acts of the 68th

Legislature, Regular Session, 1983 (Article 9022, Vernon's Texas

Civil Statutes); and

(5) a fee for exceeding a credit limit not to exceed the greater

of $15 or five percent of the amount by which the credit limit is

exceeded.

(b) A creditor may not charge, contract for, or receive interest

on fees authorized under this section.

(c) A customer's monthly statement must contain the following

notice printed or typed in at least 10-point type that is

boldfaced, capitalized, underlined, or otherwise conspicuously

set out from the surrounding written material: "A LATE CHARGE OF

FIVE PERCENT OF THE PAYMENT DUE OR A MAXIMUM OF $15 WILL BE

ASSESSED FOR A PAYMENT MADE 10 DAYS OR MORE AFTER THE DATE

PAYMENT OF THIS BILL IS DUE."

(d) With respect to a revolving credit account secured by an

interest in real property, a creditor may contract for, charge,

and receive additional fees or charges permitted under Section

342.308 as if the revolving credit account were a secondary

mortgage loan under Chapter 342.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 1348, Sec. 2, eff. Sept. 1,

1999; Acts 2003, 78th Leg., ch. 887, Sec. 3, eff. Sept. 1, 2003.

SUBCHAPTER C. CREDITOR'S DUTIES AND AUTHORITY

Sec. 346.201. INSURANCE; COLLATERAL. In connection with a

revolving credit account, a creditor may require or take

insurance subject to the provisions of Chapter 342, relating to

insurance, as if the revolving credit account were a loan

contract under that chapter. A creditor may require or take real

or personal property as collateral.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.55, eff. Sept. 1,

1999; Acts 2003, 78th Leg., ch. 887, Sec. 4, eff. Sept. 1, 2003.

Sec. 346.202. AMOUNTS AUTHORIZED TO BE RECOVERED FROM CUSTOMER.

(a) A creditor may recover from a customer amounts incurred by

the creditor for:

(1) court costs;

(2) attorney's fees assessed by a court;

(3) a fee authorized by law for filing or recording in a public

office a document securing a revolving credit account, including

a document releasing a security interest;

(4) a fee for recording a lien on or transferring a certificate

of title to a motor vehicle securing a revolving credit account;

(5) a reasonable amount spent for repossessing, storing,

preparing for sale, or selling collateral; or

(6) a premium or an identifiable charge received in connection

with sale of insurance authorized for a revolving credit account.

(b) With respect to a revolving credit account secured by an

interest in real property, a creditor may contract for, charge,

and receive additional fees or charges permitted under Section

342.307 as if the revolving credit account were a secondary

mortgage loan under Chapter 342.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2003, 78th Leg., ch. 887, Sec. 5, eff. Sept. 1,

2003.

Sec. 346.203. MORE THAN ONE REVOLVING CREDIT ACCOUNT AUTHORIZED.

(a) On a customer's request, a creditor may enter into more

than one revolving credit account with the customer and may

charge interest on each account.

(b) A creditor may not require that a customer enter into more

than one revolving credit account for the purpose of collecting

interest at a rate greater than the rate authorized by law.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 346.204. AMENDMENT OF REVOLVING CREDIT ACCOUNT BY CREDITOR.

(a) A creditor unilaterally may amend a revolving credit

account.

(b) A change made under Subsection (a) that relates to an

existing or future balance of a revolving credit account and that

is adverse to the customer may not take effect before the first

billing cycle that begins after the 90th day after the date of

written notice of the change to the customer unless the amendment

is made under Section 303.103.

(c) With respect to a revolving credit account secured by an

interest in real property, a creditor who makes a change under

Subsection (a) that relates to an existing or future balance of

the account and that is adverse to the customer must comply with

the procedures in Section 303.103.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 2001, 77th Leg., ch. 1235, Sec. 16, eff. Sept. 1,

2001; Acts 2003, 78th Leg., ch. 887, Sec. 6, eff. Sept. 1, 2003.

Sec. 346.205. COMPLIANCE WITH FEDERAL CONSUMER CREDIT PROTECTION

ACT. This chapter does not change a creditor's obligation to

comply with the Consumer Credit Protection Act (15 U.S.C. Section

1601 et seq.)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 346.206. ACCELERATION OR IMMEDIATE PAYMENT DEMAND

PROHIBITED. With respect to a revolving credit account secured

by an interest in real property, a creditor may not accelerate or

demand immediate payment of an amount owed under the account

unless the customer is in default under the terms of the account

agreement.

Added by Acts 2003, 78th Leg., ch. 887, Sec. 7, eff. Sept. 1,

2003.