article: SECTION 1. SHORT TITLE; TABLE OF CONTENTS. This Act may be cited as the ``Credit Card Accountability Responsibility and Disclosure Act of 2006'' or the ``Credit CARD Act of 2006''. SEC. 2. REGULATORY AUTHORITY. The Board of Governors of the Federal Reserve System may issue such rules or publish such model forms as it considers necessary to carry out this Act and the amendments made by this Act, in accordance with sections 105 and 122 of the Truth in Lending Act. TITLE I--REGULATIONS REGARDING CERTAIN RATES AND FEES SEC. 101. PRIOR NOTICE OF RATE INCREASES REQUIRED. Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended by adding at the end the following: ``(h) Advance Notice of Increase in Interest Rate Required.-- ``(1) In general.--In the case of any credit card account under an open end consumer credit plan, no increase in any annual percentage rate of interest (other than an increase due to the expiration of any introductory percentage rate of interest, or due solely to a change in another rate of interest to which such rate is indexed)-- ``(A) may take effect before the beginning of the billing cycle which begins not less than 15 days after the obligor receives notice of such increase; or ``(B) may apply to any outstanding balance of credit under such plan as of the date of the notice of the increase required under paragraph (1). ``(2) Notice of right to cancel.--The notice referred to in paragraph (1) with respect to an increase in any annual percentage rate of interest shall be made in a clear and conspicuous manner and shall contain a brief statement of the right of the obligor to cancel the account before the effective date of the increase.''. SEC. 102. FREEZE ON INTEREST RATE TERMS AND FEES ON CANCELED CARDS. Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended by inserting after subsection (h) (as added by section 101 of this title) the following new subsection: ``(i) Freeze on Interest Rate Terms and Fees on Canceled Cards.--If an obligor referred to in subsection (h) closes or cancels a credit card account before the beginning of the billing cycle referred to in subsection (h)(1)-- ``(1) an annual percentage rate of interest applicable after the cancellation with respect to the outstanding balance on the account as of the date of cancellation may not exceed any annual percentage rate of interest applicable with respect to such balance under the terms and conditions in effect before the date of the notice of any increase referred to in subsection (h)(1); and ``(2) the repayment of the outstanding balance after the cancellation shall be subject to all other terms and conditions applicable with respect to such account before the date of the notice of the increase referred to in subsection (h).''. SEC. 103. LIMITS ON FINANCE AND INTEREST CHARGES FOR ON-TIME PAYMENTS. Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended by inserting after subsection (i) (as added by section 102 of this title) the following new subsection: ``(j) Prohibition on Penalties for On-Time Payments.-- ``(1) Prohibition on finance charges for on-time payments.--In the case of any credit card account under an open end credit plan, where no other balance is owing on the account, no finance or interest charge may be imposed with regard to any amount of a new extension of credit that was paid on or before the date on which it was due. ``(2) Prohibition on cancellation or additional fees for on-time payments or payment in full.--In the case of any credit card account under an open end consumer credit plan, no fee or other penalty may be imposed on the consumer in connection with the payment in full of an existing account balance, or payment of more than the minimum required payment of an existing account balance.''. SEC. 104. PROHIBITION ON OVER-THE-LIMIT FEES FOR CREDITOR-APPROVED TRANSACTIONS. Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended by inserting after subsection (j) (as added by section 103 of this title) the following new subsection: ``(k) Limitation on Imposition of Over-the-Limit Fees.--In the case of any credit card account under an open end consumer credit plan, a creditor may not impose any fees on the obligor for any extension of credit in excess of the amount of credit authorized to be extended with respect to such account, if the extension of credit is made in connection with a credit transaction which the creditor approves in advance or at the time of the transaction.''. TITLE II--ENHANCED CONSUMER DISCLOSURES SEC. 201. PAYOFF TIMING DISCLOSURES. (a) In General.--Section 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)) is amended by adding at the end the following new paragraph: ``(12) Repayment information.-- ``(A) In general.--Repayment information that would apply to the outstanding balance of the consumer under the credit plan, including-- ``(i) the outstanding balance in the account at the beginning of the statement period, as required by paragraph (1) of this subsection; ``(ii) the required minimum monthly payment on that balance, represented as both a dollar figure and as a percentage of that balance; ``(iii) the grace period within which payment must be made to avoid additional charges, as required by paragraph (9) of this subsection; and ``(iv) the monthly payments amount that would be required for the consumer to eliminate the outstanding balance in 36 months if no further advances are made. ``(B) Applicable annual percentage rate.-- ``(i) In general.--Subject to clause (ii), in making the disclosures under subparagraph (A), the creditor shall apply the annual percentage rate in effect on the date on which the disclosure is made until the date on which the balance would be paid in full. ``(ii) Exception.--If the annual percentage 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 rate in effect on the date on which the disclosure is made for as long as that rate will apply under that contractual provision, and then apply an annual percentage rate based on the index or formula in effect on the applicable billing date.''. (b) Tabular Format Required for Disclosures.--Section 122 of the Truth in Lending Act (15 U.S.C. 1632) by adding at the end the following new subsection: ``(d) Format Required for Certain Disclosures Under Section 127(b)(12).-- ``(1) Form of disclosure.--All of the information disclosed pursuant to section 127(b)(12)(A) shall-- ``(A) be disclosed in the form and manner which the Board shall prescribe by regulations under this section and in accordance with section 105; and ``(B) be placed in a conspicuous and prominent location on the billing statement in typeface that is at least as large as the largest type on the statement, but in no instance less than 12-point in size. ``(2) Tabular format.--In the regulations prescribed under paragraph (1), the Board shall require that the disclosure of such information shall be in the form of a table that-- ``(A) contains clear and concise headings for each item of such information; and ``(B) provides a clear and concise form stating each item of information required to be disclosed under each such heading. ``(3) Requirements regarding location and order of table.-- In prescribing the form of the table under paragraph (2), the Board shall require that-- ``(A) 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 subparagraph; and ``(B) the items required to be included in the table shall be listed in the order in which such items are set forth in section 127(b)(12)(A). ``(4) Board discretion in prescribing order and wording of table.--In prescribing the form of the table under subparagraph (C), the Board may employ terminology which is different than the terminology which is employed in subparagraph (A), if such terminology is easily understood and conveys substantially the same meaning.''. (c) Civil Liability.--Section 130(a) of the Truth in Lending Act (15 U.S.C. 1640(a)) is amended, in the undesignated paragraph following paragraph (4), by striking the second sentence and inserting the following: ``In connection with the disclosures referred to in subsections (a) and (b) of section 127, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 125, 127(a), or paragraph (4), (5), (6), (7), (8), (9), (10), or (11) of section 127(b), or for failing to comply with disclosure requirements under State law for any term or item that the Board has determined to be substantially the same in meaning under section 111(a)(2) as any of the terms or items referred to in section 127(a), or paragraph (4), (5), (6), (7), (8), (9), (10), (11), or (12) of section 127(b). SEC. 202. REQUIREMENTS RELATING TO LATE PAYMENT DEADLINES AND PENALTIES. Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended by inserting after subsection (k) (as added by section 104 of this Act) the following new subsection: ``(l) Requirements Relating to Late Payment Deadlines and Penalties.-- ``(1) Late payment deadline and postmark date required to be disclosed.--In the case of a credit card account under an open end consumer credit plan under which a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment, the periodic statement required under subsection (b) with respect to the account shall include, in a conspicuous location on the billing statement-- ``(A) the date by which the payment must be postmarked, if paid by mail, in order to avoid the imposition of a late payment fee with respect to the payment; and ``(B) a statement that no late fee may be imposed in connection with a payment made by mail which was postmarked on or before the postmark date. ``(2) Disclosure of increase in interest rates for late payments.--If 1 or more late payments under an open end consumer credit plan may result in an increase in the annual percentage rate the account, the statement required under subsection (b) with respect to the account shall include conspicuous notice of such fact, together with the applicable penalty annual percentage rate, in close proximity to the disclosure required in paragraph (1) of the date on which payment is due under the terms of the account. ``(3) Requirements relating to postmark date.-- ``(A) In general.--The date included in a periodic statement pursuant to paragraph (1)(B) with regard to the postmark on a payment shall allow, in accordance with regulations prescribed by the Board under subparagraph (B), a reasonable time for the consumer to make the payment and a reasonable time for the delivery of the payment by the due date. ``(B) Board regulations.--The Board shall prescribe guidelines for determining a reasonable period of time for making a payment and delivery of a payment for purposes of subparagraph (A), after consultation with the Postmaster General and representatives of consumer and trade organizations. ``(4) Payment at local branches.--If the creditor, in the case of a credit card account referred to in paragraph (1), is a financial institution which maintains branches or offices at which payments on any such account are accepted from the obliger in person, the date on which the obliger makes a payment on the account at such branch or office shall be considered as the date on which the payment is made for purposes of determining whether a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment, to the extent that such payment is made before the close of business of the branch or office on the business day immediately preceding the due date for such payment.''. TITLE III--PROTECTION OF YOUNG CONSUMERS SEC. 301. EXTENSIONS OF CREDIT TO UNDERAGE CONSUMERS. Section 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) is amended by adding at the end the following new paragraph: ``(8) Applications from underage consumers.-- ``(A) Prohibition on issuance.--No credit card may be issued to, or open end credit plan established on behalf of, a consumer who has not attained the age of 21, unless the consumer has submitted a written application to the card issuer that meets the requirements of subparagraph (B). ``(B) Application requirements.--An application to open a credit card account by an individual who has not attained the age of 21 as of the date of submission of the application shall require-- ``(i) the signature of the parent, legal guardian, or spouse of the consumer, or any other individual having a means to repay debts incurred by the consumer in connection with the account, indicating joint liability for debts incurred by the consumer in connection with the account before the consumer has attained the age of 18; ``(ii) submission by the consumer of financial information indicating an independent means of repaying any obligation arising from the proposed extension of credit in connection with the account; or ``(iii) proof by the consumer that the consumer has completed a credit counseling course of instruction by a nonprofit budget and credit counseling agency approved by the Board for such purpose. ``(C) Minimum requirements for counseling agencies.--To be approved by the Board under subparagraph (B)(iii), a credit counseling agency shall, at a minimum-- ``(i) be a nonprofit budget and credit counseling agency, the majority of the board of directors of which-- ``(I) is not employed by the agency; and ``(II) will not directly or indirectly benefit financially from the outcome of a credit counseling session; ``(ii) if a fee is charged for counseling services, charge a reasonable fee, and provide services without regard to ability to pay the fee; and ``(iii) provide trained counselors who receive no commissions or bonuses based on referrals, and demonstrate adequate experience and background in providing credit counseling.''. SEC. 302. ENHANCED PENALTIES. Section 130(a)(2)(A) of the Truth in Lending Act (15 U.S.C. 1640 (a)(2)(A)(iii)) is amended---- (1) by striking ``or (iii) in the'' and inserting the following: ``(iii) in the case of an individual action relating to an open end credit plan that is not secured by real property or a dwelling, twice the amount of any finance charge in connection with the transaction, with a minimum of $500 and a maximum of $5,000 or such higher amount as may be appropriate in the case of an established pattern or practice of such failures; or ``(iv) in the''; and. (2) in clause (ii), by striking ``this subparagraph'' and inserting ``this clause''. SEC. 303. RESTRICTIONS ON CERTAIN AFFINITY CARDS. Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended by inserting after subsection (l) (as added by section 202 of this Act) the following new subsection: ``(m) Restrictions on Issuance of Affinity Cards to Students.--No credit card account under an open end credit plan may be established by an individual who has not attained the age of 18 as of the date of submission of the application pursuant to any agreement relating to affinity cards, as defined by the Board, between the creditor and an institution of higher education (as defined in section 101(a) of the Higher Education Act of 1965), unless the requirements of section 127(c)(8) are met with respect to the obliger.''.
summary: Credit Card Accountability Responsibility and Disclosure Act of 2006, or the Credit CARD Act of 2006 - Amends the Truth in Lending Act to require advance notice of any increase in the annual percentage rate (APR) of interest pertaining a credit card account under an open end consumer credit plan. Imposes a freeze on interest rate terms and fees on canceled cards. Prohibits: (1) penalties for on-time payments; and (2) over-the-limit fees for creditor-approved transactions. Requires disclosure of: (1) the repayment information applicable to the outstanding balance; and (2) late payment deadlines, postmark dates, and any increase in interest rates for late payments. Increases the civil penalty against any creditor who fails to comply with specified requirements in the case of an individual action relating to an open end credit plan that is not secured by real property or a dwelling. Prohibits issuance of: (1) a credit card under an open end credit plan on behalf of a consumer who has not attained the age of 21, unless the consumer has submitted a written application meeting specified requirements; or (2) certain affinity cards to students unless certain requirements have been met.