H*3703 Session 103 (1979-1980)
H*3703(Rat #0504, Act #0433 of 1980) General Bill, By
House Labor, Commerce and Industry
A Bill to amend Section 37-2-207, Code of Laws of South Carolina, 1976,
relating to credit service charges for revolving charge accounts so as to
provide that the monthly billing cycle be two percent of that part of five
hundred dollars or less instead of one and one-half percent of that part of
one thousand dollars or less and one-half percent on an amount over five
hundred dollars instead of one percent on an amount over one thousand dollars,
provide that no less than forty percent of minimum payment be applied to
reduction of a billing cycle instead of forty-two percent and to remove the
eighteen percent per annum ceiling; to amend Section 37-3-201 relating to
maximum charges on loans so as to consolidate into such Section the provisions
of Sections 37-3-508 and 37-3-515 concerning loan finance charges; to amend
Section 37-3-605, as amended, relating to finance charges for loans other than
consumer loans so as to remove the limit on the finance charges on a loan in
excess of $25,000 except loans secured by a first lien on land or loans for
agricultural purpose, and to permit holders of credit accounts to pay accounts
in accordance with original contract; to amend Section 37-2-416 relating to
change in terms of revolving charge accounts so as to require the creditor to
deliver or mail one written notice of change at least thirty days before date
of change instead of two notices three months before date of change; to amend
Section 37-3-408, as amended, relating to the changing of terms of a revolving
loan account so as to change the term revolving loan account to revolving
charge account, loan finance charge to credit service charge and debtor to
consumer and to require the creditor to mail to the consumer one written
disclosure of the change instead of two such disclosures; and to amend Section
37-3-601 relating to loans subject to the consumer protection code so as to
permit the parties to agree or not to make supervised loans or such loans
pursuant to a credit card subject to such code, and to repeal Sections
37-3-508 and 37-3-515 mentioned above and Chapter 17 of Title 56, the South
Carolina Motor Vehicle Sales Finance Act.-at
03/25/80 House Introduced, read first time, placed on calendar
without reference HJ-1661
04/02/80 House Debate adjourned HJ-1830
04/02/80 House Reconsidered HJ-1841
04/09/80 House OBJECTION HJ-1968
04/10/80 House Special order, set for THURS. APRIL 10, 1980 AT
10:30 A.M.(UNDER H-3807) HJ-1978
04/10/80 House Amended HJ-1995
04/10/80 House Read second time HJ-2029
04/17/80 House Read third time and sent to Senate HJ-2163
04/17/80 Senate Introduced and read first time SJ-10
04/17/80 Senate Referred to Committee on Banking and Insurance SJ-10
04/29/80 Senate Committee report: Favorable with amendment
Banking and Insurance SJ-19
04/30/80 Senate Read second time SJ-41
04/30/80 Senate Ordered to third reading with notice of
amendments SJ-41
05/01/80 Senate Amended SJ-9
05/01/80 Senate READ THIRD TIME SJ-9
05/01/80 Senate Returned SJ-9
05/14/80 House Senate amendment amended HJ-2886
05/14/80 House Returned HJ-2886
05/15/80 Senate Concurred in House amendment and enrolled SJ-3
05/21/80 House Ratified R 504 HJ-2964
05/26/80 Signed By Governor
05/26/80 Effective date 07/01/80
05/26/80 Act No. 433
06/16/80 Copies available
(A433, R504, H3703)
AN ACT TO AMEND SECTION 37-2-207, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO CREDIT SERVICE CHARGES FOR REVOLVING CHARGE ACCOUNTS, SO AS TO
PROVIDE THAT THE MONTHLY BILLING CYCLE BE TWO PERCENT OF THAT PART OF FIVE
HUNDRED DOLLARS OR LESS INSTEAD OF ONE AND ONE-HALF PERCENT OF THAT PART OF
ONE THOUSAND DOLLARS OR LESS AND ONE AND ONE-HALF PERCENT OF AN AMOUNT OVER
FIVE HUNDRED DOLLARS INSTEAD OF ONE PERCENT OF AN AMOUNT OVER ONE THOUSAND
DOLLARS, PROVIDE THAT NO LESS THAN FORTY PERCENT OF MINIMUM PAYMENT BE APPLIED
TO REDUCTION OF A BILLING CYCLE INSTEAD OF FORTY-TWO PERCENT AND TO REMOVE THE
EIGHTEEN PERCENT PER ANNUM CEILING; TO AMEND SECTION 37-3-201, RELATING TO
MAXIMUM CHARGES ON LOANS, SO AS TO CONSOLIDATE INTO SUCH SECTION THE
PROVISIONS OF SECTIONS 37-3-508 AND 37-3-515 CONCERNING LOAN FINANCE CHARGES;
TO AMEND SECTION 37-3-605, AS AMENDED, RELATING TO FINANCE CHARGES FOR LOANS
OTHER THAN CONSUMER LOANS, SO AS TO REMOVE THE LIMIT ON THE FINANCE CHARGES ON
A LOAN IN EXCESS OF TWENTY-FIVE THOUSAND DOLLARS EXCEPT LOANS SECURED BY A
FIRST LIEN ON LAND OR LOANS FOR AGRICULTURAL PURPOSE, AND TO PERMIT HOLDERS OF
CREDIT ACCOUNTS TO PAY ACCOUNTS IN ACCORDANCE WITH ORIGINAL CONTRACT; TO AMEND
SECTION 37-2-416, AS AMENDED, RELATING TO CHANGE IN TERMS OF REVOLVING CHARGE
ACCOUNTS, SO AS TO REQUIRE THE CREDITOR TO DELIVER OR MAIL ONE WRITTEN NOTICE
OF CHANGE AT LEAST THIRTY DAYS BEFORE DATE OF CHANGE INSTEAD OF TWO NOTICES
THREE MONTHS BEFORE DATE OF CHANGE; TO AMEND SECTION 37-3-408, AS AMENDED,
RELATING TO THE CHANGING OF TERMS OF A REVOLVING LOAN ACCOUNT, SO AS TO CHANGE
THE TERM REVOLVING LOAN ACCOUNT TO REVOLVING CHARGE ACCOUNT, LOAN FINANCE
CHARGE TO CREDIT SERVICE CHARGE AND DEBTOR TO CONSUMER AND TO REQUIRE THE
CREDITOR TO MAIL TO THE CONSUMER ONE WRITTEN DISCLOSURE OF THE CHANGE INSTEAD
OF TWO SUCH DISCLOSURES; TO AMEND SECTION 37-3-601, RELATING TO LOANS SUBJECT
TO THE CONSUMER PROTECTION CODE, SO AS TO PERMIT THE PARTIES TO AGREE OR NOT
TO MAKE SUPERVISED LOANS OR SUCH LOANS PURSUANT TO A CREDIT CARD SUBJECT TO
SUCH CODE; TO PROVIDE THAT THE PROVISIONS OF THIS ACT EXPIRE ON JULY 1, 1982,
AND TO PROVIDE EXCEPTIONS THERETO; AND TO REPEAL SECTIONS 37-3-508 AND
37-3-515 MENTIONED ABOVE AND CHAPTER 17 OF TITLE 56, THE SOUTH CAROLINA MOTOR
VEHICLES SALES FINANCE ACT.
Be it enacted by the General Assembly of the State of South Carolina:
Charges on certain consumer credit sales
Section 1. Section 37-2-207 of the 1976 Code is amended to read:
"Section 37-2-207. (1) With respect to a consumer credit sale made
pursuant to a revolving charge account, the parties to the sale may contract
for the payment by the buyer of a credit service charge not exceeding that
permitted in this section but, if they do not so contract in writing, no
charge shall be made.
(2) A charge may be made in each billing cycle which is a percentage of an
amount no greater than:
(a) the average daily balance of the account,
(b) the unpaid balance of the account on the same day of the billing
cycle,
(c) the median amount within a specified range within which the average
daily balance of the account or the unpaid balance of the account on the same
day of the billing cycle is included. A charge may be made pursuant to this
paragraph only if the seller, subject to classifications and differentiations
he may reasonably establish, makes the same charge on all balances within the
specified range and if the percentage when applied to the median amount within
the range does not produce a charge exceeding the charge resulting from
applying that percentage to the lowest amount within the range by more than
eight percent of the charge on the median amount.
(3) If the billing cycle is monthly, the charge may not exceed two percent
of that part of the amount pursuant to subsection (2) which is five hundred
dollars or less and one and one-half percent on that part of this amount which
is more than five hundred dollars. If the billing cycle is not monthly, the
maximum charge is that percentage which bears the same relation to the
applicable monthly percentage as the number of days in the billing cycle bears
to thirty. For the purposes of this section, a variation of not more than four
days from month to month is 'the same day of the billing cycle'.
(4) Notwithstanding subsection (3), if there is an unpaid balance on the
same date as of which the credit service charge is applied, the seller may
contract for and receive a charge not exceeding fifty cents if the billing
cycle is monthly or longer, or the pro- rata part of fifty cents which bears
the same relation to fifty cents as the number of days in the billing cycle
bears to thirty if the billing cycle is shorter than monthly.
(5) Notwithstanding subsection (3), and except for subsection (4), no less
than forty percent of any scheduled minimum payment for that billing cycle
must be applied to principal reduction in that billing cycle."
Finance charges on consumer loans
Section 2. Section 37-3-201 of the 1976 Code, which was added pursuant to
Section 1 of Act 686 of 1976, is amended to read:
"Section 37-3-201. (1) With respect to a consumer loan, including a
loan pursuant to open-end credit, a lender who is not a supervised lender may
contract for and receive a finance charge, calculated according to the
actuarial method, not exceeding eighteen percent per year. With respect to a
consumer loan made pursuant to open-end credit, the finance charge shall be
deemed not to exceed eighteen percent per year if the finance charge
contracted for and received does not exceed a charge for each monthly billing
cycle which is one and one-half percent of the average daily balance of the
open-end account in the billing cycle for which the charge is made. The
average daily balance of the open-end account is the sum of the amount unpaid
each day during that cycle divided by the number of days in the cycle. The
amount unpaid on a day is determined by adding to any balance unpaid as of the
beginning of that day all purchases, loans and other debits and deducting all
payments and other credits made or received as of that day. If the billing
cycle is not monthly, the finance charge shall be deemed not to exceed
eighteen percent per year if the finance charge contracted for and received
does not exceed a percentage which bears the same relation to one and one-half
percent as the number of days in the billing cycle bears to three hundred
sixty-five divided by twelve. A billing cycle is monthly if the closing date
of the cycle is the same date each month or does not vary by more than four
days from the regular date.
(2) With respect to a consumer loan, including a loan pursuant to open-end
credit, a supervised lender may contract for and receive a finance charge,
calculated according to the actuarial method, not exceeding the equivalent of
the greater of either of the following:
(a) the total of:
(i) thirty-six percent per year on that part of the unpaid balances of
the amount financed which is three hundred dollars or less;
(ii) twenty-one percent per year on that part of the unpaid balances of
the amount financed which exceeds three hundred dollars but does not exceed
one thousand dollars;
(iii) fifteen percent per year on that part of the unpaid balances of
the amount financed which exceeds one thousand dollars; or
(b) eighteen percent per year on the unpaid balances of the amount
financed; provided, however, that with respect to a consumer loan pursuant to
a lender credit card a supervised lender may contract for a finance charge not
exceeding that specified in Section 37-2-207 for revolving charge accounts.
(3) This section does not limit or restrict the manner of calculating the
finance charge, whether by way of add-on, discount, single annual percentage
rate, or otherwise, so long as the rate of the finance charge does not exceed
that permitted by this section.
The finance charge may be contracted for and earned at the single annual
percentage rate that would earn the same finance charge as the graduated rates
when the debt is paid according to the agreed terms and the calculations are
made according to the actual method. If the loan is a precomputed consumer
credit transaction:
(a) the finance charge may be calculated on the assumption that all
scheduled payments will be made when due
(b) the effect of prepayment is governed by the provisions on rebate upon
prepayment (Section 37-3-210).
(4) Except as provided in subsection (5), the term of a loan for purposes of
this section commences on the day the loan is made. Any month may be counted
as one-twelfth of a year but a day is counted as one-three hundred
sixty-fifths of a year. Subject to classifications and differentiations the
lender may reasonably establish, a part of a month in excess of fifteen days
may be treated as a full month if periods of fifteen days or less are
disregarded and that procedure is not consistently used to obtain a greater
yield than would otherwise be permitted. The administrator may adopt
regulations not inconsistent with the Federal Truth in Lending Act with
respect to treating as regular other minor irregularities in amount or time.
(5) Subject to classifications and differentiations the lender may
reasonably establish, he may make the same finance charge on all amounts
financed within a specified range. A finance charge so made does not violate
subsection (1) or (2) if:
(a) when applied to the median amount within each range, it does not
exceed the maximum permitted by the applicable subsection,
(b) when applied to the lowest amount within each range, it does not
produce a rate of finance charge exceeding the rate calculated according to
item (a) by more than eight percent of the rate calculated according to item
(a)."
Loans other than consumer loans
Section 3. Section 3.605 of Article 3, Part 6 of Act 1241 of 1974, as last
amended by Section 4 of Act 326 of 1980, is officially designated Section
37-3-605 of the 1976 Code and is further amended to read:
"Section 37-3-605. With respect to a loan other than a consumer loan,
in excess of twenty-five thousand dollars, the parties may contract for the
payment by the debtor of any finance or other charge except such loans that
are primarily secured by a first lien which is a purchase money security
interest in land or such loans made primarily for agricultural purposes."
Changing terms of revolving charge accounts
Section 4. Subsection (1) of Section 37-2-416 of the 1976 Code, as last
amended by Act 686 of 1976, is further amended to read:
"(1) Whether or not a change is authorized by prior agreement, a
creditor may change the terms of a revolving charge account applying to any
balance incurred before or after the effective date of the change. If the
change increases the rate of the credit service charge or of additional
charges, alters the method of determining the balance upon which charges are
made so that increased charges may result, or imposes or increases minimum
charges, the change is effective with respect to a balance incurred before the
effective date of the change only if the consumer after receiving disclosure
of the change agrees that it in writing or the creditor delivers or mails to
the consumer one written disclosure of the change at least thirty days before
the effective date and the consumer incurs additional debt on or after that
date."
Further
Section 5. Subsection (1) of Section 37-3-408 of the 1976 Code, as last
amended by Act 686 of 1976, is further amended to read:
"(1) Whether or not a change is authorized by prior agreement, a
creditor may change the terms of a revolving loan account applying to any
balance incurred before or after the effective date of the change. If the
change increases the rate of the loan finance charge or of additional charges,
alters the method of determining the balance upon which charges are made so
that increased charges may result, or imposes or increases minimum charges,
the change is effective with respect to a balance incurred before the
effective date of the change only if the debtor after receiving disclosure of
the change agrees to it in writing or the creditor delivers or mails to the
debtor one written disclosure of the change at least thirty days before the
effective date and the debtor incurs additional debt on or after that
date."
Loans subject to Title 37
Section 6. Section 37-3-601 of the 1976 Code, added by Act 686 of 1976, is
amended to read:
"Section 37-3-601. Except in the case of a loan primarily secured by a
first lien which is a purchase money security interest in land, the parties to
a loan other than a consumer loan may agree in writing signed by the parties
that the loan is subject to the provisions of this title applying to consumer
loans. If the parties so agree, the loan is a consumer loan for all purposes
of this title."
Repeal
Section 7. Sections 37-3-508 and 37-3-515 of the 1976 Code, added pursuant
to Section 2 of Act 686 of 1976, and Chapter 17 of Title 56 are repealed.
Provisions to expire
Section 8. The provisions of this act shall expire on July 1, 1982, and
those provisions of law affected by this act shall regain the force of law
according to their terms as existing before this act.
Time effective
Section 9. This act shall take effect July 1, 1980. |