Fair Credit Card Rate Protection Act

Section 1. Title

This act shall be known and may be cited as the “Fair Credit Card Rate Protection Act.”

Section 2. Legislative Findings & Intent

The Legislature finds that:

Credit card interest rates have reached levels that place undue financial strain on consumers;
Excessive interest rates and fees can trap individuals in long-term debt cycles;
Greater transparency, reasonable limits, and enforcement are necessary to protect consumers while preserving access to credit;

Therefore, the purpose of this act is to:

Establish reasonable limits on credit card interest rates;
Promote transparency and fairness in lending practices;
Prevent abusive or predatory financial practices;
Provide oversight and enforcement to protect consumers.
Section 3. Definitions

For the purposes of this act:

“Credit Card Issuer” means any entity offering revolving consumer credit usable for purchases or cash advances.
“Annual Percentage Rate (APR)” means the annual cost of credit expressed as a percentage.
“Consumer” means any individual using a credit card for personal, family, or household purposes.
Section 4. Maximum Allowable Interest Rate

(a) No credit card issuer shall charge an APR exceeding:

18% annually, or
A variable rate tied to a benchmark (e.g., Prime Rate + a fixed margin) as determined by regulation,

whichever is lower.

(b) Any rate above this limit shall be deemed excessive and unlawful for accounts held by residents of this state.

Section 5. Limitations on Rate Increases

(a) Credit card issuers shall not:

Increase the APR on existing balances except under clearly defined and disclosed conditions;
Apply retroactive rate increases to prior purchases;

(b) Any permitted increase must include:

Advance written notice;
A reasonable opportunity for the consumer to opt out or close the account.
Section 6. Fee and Penalty Restrictions

(a) Issuers shall not impose:

Excessive late fees or penalty charges disproportionate to the violation;
Hidden or undisclosed fees;

(b) All fees must be:

Clearly disclosed in plain language;
Reasonably related to actual administrative costs.
Section 7. Transparency Requirements

(a) Issuers must provide:

Clear, plain-language disclosure of APR, fees, and penalties;
Itemized monthly statements showing interest and fee breakdowns;

(b) Any changes to rates or terms must be:

Clearly communicated in advance;
Easily understandable to consumers.
Section 8. Consumer Protections

(a) Consumers shall have the right to:

Dispute charges or interest applied in violation of this act;
Receive prompt resolution of complaints;

(b) No issuer shall engage in deceptive or misleading practices.

Section 9. Oversight and Enforcement

(a) The appropriate state regulatory authority shall:

Monitor compliance with this act;
Conduct audits and investigations;
Receive and act upon consumer complaints;

(b) Findings of non-compliance shall be made public.

Section 10. Penalties

(a) Any issuer found in violation shall be subject to:

Civil penalties and fines;
Refunds or credits to affected consumers;
Potential restriction or suspension of operations within the state;

(b) Repeated or willful violations may result in enhanced penalties.

Section 11. Severability

If any provision of this act is held invalid, such invalidity shall not affect the remaining provisions.

Section 12. Effective Date

This act shall take effect within a defined period following adoption.