PRINTER'S NO. 2001
No. 1624 Session of 1987
INTRODUCED BY J. TAYLOR AND WESTON, JUNE 30, 1987
REFERRED TO COMMITTEE ON BUSINESS AND COMMERCE, JUNE 30, 1987
AN ACT
1 Amending the act of October 28, 1966 (1st Sp.Sess., P.L.55,
2 No.7), entitled "An act defining, regulating and relating to
3 retail installment contracts for all goods and services
4 except certain motor vehicles and home improvements;
5 prescribing the requirements of such contracts and
6 limitations on the enforcement thereof; and providing
7 remedies and penalties," further providing for service
8 charges.
9 The General Assembly of the Commonwealth of Pennsylvania
10 hereby enacts as follows:
11 Section 1. Sections 501 and 904 of the act of October 28,
12 1966 (1st Sp.Sess., P.L.55, No.7), known as the Goods and
13 Services Installment Sales Act, amended March 25, 1982 (P.L.199,
14 No.68) and reenacted March 1, 1985 (P.L.2, No.2), are amended to
15 read:
16 Section 501. (a) A seller may, in a retail installment
17 contract, contract for and, if so contracted for, the holder
18 thereof may charge, receive and collect a service charge
19 measured for a period between the date of such contract and the
20 due date of the last installment and calculated for that period
1 according to the actuarial method of computation or by
2 application of the United States rule at a rate [which does not
3 exceed the equivalent of eighteen percent (18%) simple interest
4 per annum] of seven percent (7%) plus the average annual
5 percentage yield on one-year obligations of the United States
6 issued by the Secretary of the Treasury under 31 U.S.C. §
7 3104(a) (relating to certificates of indebtedness and Treasury
8 bills) determined as of January 1 or July 1 next preceding the
9 assessment of the finance charge by more than thirty days. An
10 issuer of a credit card may continue on and after January 1,
11 1988, to charge, receive and collect interest on the unpaid
12 balance of a credit card account balance as of December 31,
13 1987, at any lawful rate stipulated by the contract between the
14 issuer and cardholder. For purposes of this section, all moneys
15 paid by the cardholder in reduction of the unpaid balance of a
16 credit card account other than the interest thereon, shall be
17 deemed first allocated to satisfaction of the portion of the
18 unpaid balance, if any, for which interest is computed pursuant
19 to this section.
20 [(b) Notwithstanding the rates provided for in this section,
21 no issuer of a credit card primarily engaged as a seller or
22 distributor of gasoline shall be permitted to charge, receive or
23 collect a service charge in excess of fifteen percent (15%)
24 simple interest per annum on unpaid balances.]
25 (c) A minimum service charge of seventy cents (70¢) per
26 month may be made for each month if the service charge so
27 computed is less than that amount; such minimum service charge
28 may be imposed for a minimum period of six months.
29 Section 904. Subject to the other provisions of this article
30 the seller or holder of a retail installment account may charge,
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1 receive and collect the service charge authorized by this act.
2 The service charge shall not exceed the following rates computed
3 on the outstanding balances from month to month:
4 (a) On the outstanding balance, [one and one-half percent (1
5 1/2%) per month] one-twelfth of the variable interest rate
6 established in section 501.
7 (b) A minimum service charge of seventy cents (70¢) per
8 month may be made for each month if the service charge so
9 computed is less than that amount; such minimum service charge
10 may be imposed for a minimum period of six months.
11 [(b.1) Notwithstanding the rate provided for in clause (a),
12 no issuer of a credit card primarily engaged as a seller or
13 distributor of gasoline shall be permitted to charge, receive or
14 collect a service charge in excess of fifteen percent (15%)
15 simple interest per annum on unpaid balances.]
16 (c) The service charge may be computed on a schedule of
17 fixed amounts if as so computed it is applied to all amounts of
18 outstanding balances equal to the fixed amount minus a
19 differential of not more than five dollars ($5), provided that
20 it is also applied to all amounts of outstanding balances equal
21 to the fixed amount plus at least the same differential.
22 Section 2. Section 904.1 of the act is repealed.
23 Section 3. Section 905(d) of the act, amended March 25, 1982
24 (P.L.199, No.68), is amended to read:
25 Section 905. The seller or holder of a retail installment
26 account shall promptly provide the buyer with a statement as of
27 the end of each monthly period (which need not be a calendar
28 month) setting forth the following:
29 * * *
30 (d) The amount of the service charge, and the following
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1 statement: The service charge herein contained does not exceed
2 the equivalent of seven percent (7%) plus the average annual
3 percentage yield on one-year obligations of the United States
4 issued by the Secretary of the Treasury, determined every six
5 months.
6 * * *
7 Section 4. Section 12 of the act of March 25, 1982 (P.L.199,
8 No.68), entitled "An act amending the act of October 28, 1966
9 (1st Sp.Sess., P.L.55, No.7), entitled 'An act defining,
10 regulating and relating to retail installment contracts for all
11 goods and services except certain motor vehicles and home
12 improvements; prescribing the requirements of such contracts and
13 limitations on the enforcement thereof; and providing remedies
14 and penalties,' further providing for applicability of the act,
15 for the contents of contracts, for a certain notice of claims or
16 defenses, for judgments, for service charges and certain fees
17 and eliminating the duty of the Department of Banking to supply
18 rate charts to retail sellers and finance agencies," is
19 repealed.
20 Section 5. This act shall take effect January 1, 1988.
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