Iowa Code 537.2402 – Finance charge for consumer loans pursuant to open-end credit
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Terms Used In Iowa Code 537.2402
- Contract: A legal written agreement that becomes binding when signed.
- Finance charge: The total cost of credit a customer must pay on a consumer loan, including interest. The Truth in Lending Act requires disclosure of the finance charge. Source: OCC
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Open-end credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or revolving credit.) Source: OCC
537.2402 Finance charge for consumer loans pursuant to open-end credit.
1. If authorized to make supervised loans, a creditor may contract for and receive a finance
charge without limitation as to amount or rate with respect to a loan pursuant to open-end credit as permitted in this section except as provided in § 537.2403.
2. For each billing cycle, a charge may be made which is a percentage of an amount not exceeding the greatest of the following:
a. The average daily balance of the open-end account in the billing cycle for which the charge is made, which is the sum of the amount unpaid each day during that cycle, divided by the number of days in that cycle. The amount unpaid on a day is determined by adding to the balance, if any, unpaid as of the beginning of that day all purchases and other debits and deducting all payments and other credits made or received as of that day.
b. The balance of the open-end account at the beginning of the first day of the billing cycle, after deducting all payments and credits made in the cycle except credits attributable to purchases charged to the account during the cycle.
c. The median amount within a specified range including the balance of the open-end account not exceeding that permitted by paragraph “”a”” or “”b””. A charge may be made pursuant to this paragraph only if the organization, subject to classifications and differentiations it 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.
[C75, 77, 79, 81, §537.2402]
84 Acts, ch 1237, §2; 89 Acts, ch 295, §2; 97 Acts, ch 187, §4, 5; 98 Acts, ch 1100, §74; 2007
Acts, ch 26, §2
Referred to in §533.316, 535.10, 536.13, 536A.31, 536C.6, 537.2401, 537.2506
1. If authorized to make supervised loans, a creditor may contract for and receive a finance
charge without limitation as to amount or rate with respect to a loan pursuant to open-end credit as permitted in this section except as provided in § 537.2403.
2. For each billing cycle, a charge may be made which is a percentage of an amount not exceeding the greatest of the following:
a. The average daily balance of the open-end account in the billing cycle for which the charge is made, which is the sum of the amount unpaid each day during that cycle, divided by the number of days in that cycle. The amount unpaid on a day is determined by adding to the balance, if any, unpaid as of the beginning of that day all purchases and other debits and deducting all payments and other credits made or received as of that day.
b. The balance of the open-end account at the beginning of the first day of the billing cycle, after deducting all payments and credits made in the cycle except credits attributable to purchases charged to the account during the cycle.
c. The median amount within a specified range including the balance of the open-end account not exceeding that permitted by paragraph “”a”” or “”b””. A charge may be made pursuant to this paragraph only if the organization, subject to classifications and differentiations it 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.
[C75, 77, 79, 81, §537.2402]
84 Acts, ch 1237, §2; 89 Acts, ch 295, §2; 97 Acts, ch 187, §4, 5; 98 Acts, ch 1100, §74; 2007
Acts, ch 26, §2
Referred to in §533.316, 535.10, 536.13, 536A.31, 536C.6, 537.2401, 537.2506