Minnesota Session Laws - 1986, Regular Session

  

                         Laws of Minnesota 1986 

                        CHAPTER 376-S.F.No. 1823 
           An act relating to financial institutions; providing 
          for open end loan account arrangements; modifying 
          permissible finance charges and annual charges; 
          eliminating alternative credit card plan requirements; 
          amending Minnesota Statutes 1984, section 48.185, 
          subdivisions 1, 3, and 4; repealing Minnesota Statutes 
          1984, section 48.185, subdivision 4a. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1984, section 48.185, 
subdivision 1, is amended to read: 
    Subdivision 1.  Any bank organized under the laws of this 
state, any national banking association doing business in this 
state, and any savings bank organized and operated pursuant to 
chapter 50, any savings association organized under chapter 51A, 
and any federally chartered savings and loan association, may 
extend credit through an open end loan account arrangement with 
a debtor, pursuant to which the debtor may obtain loans from 
time to time by cash advances, purchase or satisfaction of the 
obligations of the debtor incurred pursuant to a credit card 
plan, or otherwise under a credit card or overdraft checking 
plan. 
    Sec. 2.  Minnesota Statutes 1984, section 48.185, 
subdivision 3, is amended to read: 
    Subd. 3.  A bank or savings bank financial institution 
referred to in subdivision 1, may collect a periodic rate of 
finance charge in connection with extensions of credit pursuant 
to an overdraft checking plan under this section, which rate 
finance charge does not exceed one and one-half percent per 
month or, with respect to open-end credit extended in use of a 
bank credit card, one percent per month, or if no annual charge 
is imposed pursuant to subdivision 4, clause (a), one and 
one-half percent per month, computed on an amount no greater 
than the average daily balance of the account during each 
monthly billing cycle.  Notwithstanding variations from cycle to 
cycle, a billing cycle is "monthly" for purposes of this section 
if the average length of 12 successive billing cycles is not 
less than 30 or more than 32 days.  If the billing cycle is 
other than monthly, the maximum finance charge for that billing 
cycle shall be that percentage which bears the same relation to 
one percent or, if applicable, to one and one-half percent as 
the number of days in the billing cycle bears to 30 the 
equivalent of an annual percentage rate of 18 percent computed 
on a 365-day year and in accordance with the Truth in Lending 
Act, United States Code, title 15, section 1601 et seq., and the 
Code of Federal Regulations, title 12, part 226 (1985).  
    If credit is extended pursuant to an overdraft checking 
plan on the day on which an increase in the periodic rate of 
finance charge is made effective pursuant to this section, the 
rate in effect prior to the increase shall be the maximum lawful 
rate chargeable on the amount of credit so extended until that 
credit is fully repaid according to the terms of the plan. 
     Sec. 3.  Minnesota Statutes 1984, section 48.185, 
subdivision 4, is amended to read: 
    Subd. 4.  No charges other than those provided for in 
subdivision 3 shall be made directly or indirectly for any 
credit extended under the authority of this section, except that 
there may be charged to the debtor: 
    (a) Annual charges, not to exceed $15 $50 per annum, 
payable in advance, for the privilege of using a bank credit 
card which entitled the debtor to purchase goods or services 
from merchants, under an arrangement pursuant to which the debts 
resulting from the purchases are paid or satisfied by the bank 
or savings bank and charged to the debtor's open end loan 
account with the bank or savings bank; 
    (b) Charges for premiums on credit life and credit accident 
and health insurance if: 
    (1) The insurance is not required by the bank or savings 
bank financial institution and this fact is clearly disclosed in 
writing to the debtor; and 
    (2) The debtor is notified in writing of the cost of the 
insurance and affirmatively elects, in writing, to purchase the 
insurance. 
     Sec. 4.  [REPEALER.] 
     Minnesota Statutes 1984, section 48.185, subdivision 4a, is 
repealed. 
     Sec. 5.  [EFFECTIVE DATE.] 
     Sections 1 to 4 are effective the day following final 
enactment. 
    Approved March 19, 1986