CHAPTER 346. REVOLVING CREDIT ACCOUNTS
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.