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90_SB1678
205 ILCS 675/5 from Ch. 17, par. 7005
205 ILCS 675/8 from Ch. 17, par. 7008
Amends the Illinois Financial Services Development Act.
Provides that changes in interest rates may not be made
applicable to debt incurred prior to the effective date of
the change in the rate of interest. Effective July 1, 1998.
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LRB9008875JSgc
1 AN ACT to amend the Illinois Financial Services
2 Development Act by changing Sections 5 and 8.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Financial Services Development
6 Act is amended by changing Sections 5 and 8 as follows:
7 (205 ILCS 675/5) (from Ch. 17, par. 7005)
8 Sec. 5. A financial institution may charge and collect
9 interest under a revolving credit plan on outstanding unpaid
10 indebtedness in the borrower's account under the plan at such
11 periodic percentage rate or rates as the agreement governing
12 the plan provides or as established in the manner provided in
13 the agreement governing the plan. If the agreement governing
14 the revolving credit plan so provides, the periodic
15 percentage rate or rates of interest under such plan may vary
16 in accordance with a schedule or formula. Such periodic
17 percentage rate or rates may vary from time to time as the
18 rate determined in accordance with such schedule or formula
19 varies and such periodic percentage rate or rates, as so
20 varied, may be made applicable to all outstanding unpaid
21 indebtedness under the plan on or after the effective date of
22 such variation. A variation that increases the periodic
23 percentage rate or rates, however, shall apply only to
24 indebtedness arising out of purchases made or loans obtained
25 on or after the effective date of the rate change or
26 variation, including any such indebtedness arising out of
27 purchases made or loans obtained prior to such variation in
28 the periodic percentage rate or rates. If the applicable
29 periodic percentage rate under the agreement governing the
30 plan is other than daily, periodic interest may be calculated
31 on an amount not in excess of the average of outstanding
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1 unpaid indebtedness for the applicable billing period,
2 determined by dividing the total of the amounts of
3 outstanding unpaid indebtedness for each day in the
4 applicable billing period by the number of days in the
5 billing period. If the applicable periodic percentage rate
6 under the agreement governing the plan is monthly, a billing
7 period shall be deemed to be a month or monthly if the last
8 day of each billing period is on the same day of each month
9 or does not vary by more that 4 days therefrom.
10 (Source: P.A. 85-1432.)
11 (205 ILCS 675/8) (from Ch. 17, par. 7008)
12 Sec. 8. Amendment of governing agreement.
13 (a) If the agreement governing a revolving credit plan
14 so provides or allows, a financial institution may at any
15 time or from time to time amend the terms of such agreement
16 in accordance with the further provisions of this Section 8.
17 The financial institution shall notify each affected borrower
18 of the amendment in the manner set forth in the agreement
19 governing the plan and in compliance with the requirements of
20 the Truth-in-Lending Act and regulations promulgated
21 thereunder, as in effect from time to time, if applicable.
22 (b) Subject to subsection (c) below, if the terms of the
23 agreement governing the plan, as originally drawn or as
24 amended pursuant to this Section so provide, any amendment
25 may, on and after the date upon which it becomes effective as
26 to a particular borrower, apply to all then outstanding
27 unpaid indebtedness in the borrower's account under the plan,
28 however, an amendment that has the effect of increasing the
29 periodic percentage rate or rates applicable to the account
30 shall apply only to including any such indebtedness which
31 shall have arisen out of purchases made or loans obtained on
32 or after prior to the effective date of the amendment.
33 (c) If such amendment has the effect of increasing the
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1 interest or other charges to be paid by the borrower, the
2 financial institution shall mail or deliver to the borrower,
3 at least 30 days before the effective date of the amendment,
4 a clear and conspicuous written notice which shall:
5 (1) describe the amendment and the existing term or
6 terms of the agreement affected by the amendment,
7 (2) set forth the effective date of the amendment,
8 (3) state whether or not the amendment will apply
9 to the outstanding unpaid indebtedness as of the
10 effective date of the amendment, and if the amendment has
11 the effect of increasing the periodic rate or rates
12 applicable to the account, state that the increased rate
13 shall apply only to purchases made or loans obtained
14 after the effective date of the amendment,
15 (4) state that absent the borrower's written notice
16 to the financial institution within 30 days of the
17 earlier of the mailing or delivery of the notice of
18 amendment that the borrower does not agree to accept the
19 amendment, the amendment will become effective and apply
20 to the borrower's account, and
21 (5) provide an address to which the borrower may
22 send notice of the borrower's election not to accept the
23 amendment and include an addressed postcard that the
24 borrower may return to the financial institution for that
25 purpose.
26 As a condition to the effectiveness of the borrower's
27 notice not to accept the amendment, the financial institution
28 may require the borrower to return all credit devices.
29 Any borrower who gives a timely notice electing not to
30 accept the amendment shall be permitted to pay the
31 outstanding unpaid indebtedness in the borrower's account
32 under the plan in accordance with the terms of the agreement
33 governing the plan without giving effect to the amendment.
34 Notwithstanding the financial institution's receipt of
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1 the borrower's notice under item (4) that the borrower does
2 not accept the amendment, the amendment shall be deemed to
3 have been accepted and effective with respect to the borrower
4 and the borrower's account if the borrower uses the credit
5 device to obtain credit under the credit plan on or after the
6 effective date of the amendment, and the amendment shall be
7 deemed effective as of the effective date originally
8 disclosed by the financial institution.
9 (d) For purposes of this Section, the following shall
10 not be deemed an amendment which has the effect of increasing
11 the interest to be paid by the borrower:
12 (1) a decrease in the required amount of periodic
13 installment payments; and
14 (2) a change from a daily periodic rate to a
15 periodic rate other than daily, or from a periodic rate
16 other than daily to a daily periodic rate, provided that
17 there is no resulting change in the annual percentage
18 rate as determined in accordance with the
19 Truth-in-Lending Act and regulations promulgated
20 thereunder, as in effect from time to time.
21 (Source: P.A. 88-531.)
22 Section 99. Effective date. This Act takes effect July
23 1, 1998.