Minnesota Statutes 325G.42 – Credit Card Disclosures
Subdivision 1.Required disclosures.
A credit card application distributed in this state must disclose the following terms of the credit card plan, if applicable:
Terms Used In Minnesota Statutes 325G.42
- Annual percentage rate: The cost of credit at a yearly rate. It is calculated in a standard way, taking the average compound interest rate over the term of the loan so borrowers can compare loans. Lenders are required by law to disclose a card account's APR. Source: FDIC
- 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
- Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
- You are late making a payment or commit some other default, triggering an increase to a penalty rate
- The bank changes the terms of your account and you do not reject the change.
- The rate expires (if the rate was fixed for only a certain period of time).
- state: extends to and includes the District of Columbia and the several territories. See Minnesota Statutes 645.44
- Variable Rate: Having a "variable" rate means that the APR changes from time to time based on fluctuations in an external rate, normally the Prime Rate. This external rate is known as the "index." If the index changes, the variable rate normally changes. Also see Fixed Rate.
(1) Any periodic rate or rates that may be applied to the account, expressed as an annual percentage rate or rates. If the account is subject to a variable rate, the creditor may disclose the rate as of a specific date and indicate that the rate may vary, or may identify the index and any amount or percentage added to, or subtracted from, that index and used to determine the rate. For purposes of this section, the amount or percentage must be referred to as the “spread.” If charges incurred by use of the credit card are due and payable upon receipt of a periodic statement of charges, then that fact must be disclosed.
(2) Any membership, participation, or similar fee that may be imposed as a condition of the issuance or renewal of a credit card, expressed as an annual amount.
(3) Any minimum, fixed, transaction, activity, or similar charge.
(4) Any other fees that may be charged to the account, including late payment fees and charges for exceeding credit limits.
(5) The date or occasion upon which the finance charge, if any, begins to accrue on a transaction.
Subd. 2.Form of disclosures.
The disclosures required under this section shall be written in plain language, as defined in section 325G.31; shall be in boldface type of a minimum size of ten points; shall be clear and conspicuous; and shall be prominently set apart from the remaining portions of the credit card application or other written material, by the use of margins, enclosures, underlining, contrasting colors, or similar methods.
Subd. 3.Optional disclosure chart.
A creditor need not present the disclosures required by subdivision 1 in any specific form other than as provided in subdivision 2. However, the disclosures are conclusively presumed to satisfy the requirements of subdivision 1 if the disclosures satisfy the requirements of subdivision 2 and are presented in a chart, substantially similar to the following description:
(1) The chart shall consist of contiguous boxes, and each required disclosure shall appear exclusively within one of the boxes.
(2) The first box shall contain the wording “ANNUAL PERCENTAGE RATE” if the creditor charges a fixed rate, or “VARIABLE RATE INDEX AND SPREAD,” if appropriate, underneath which the creditor’s rate will appear. If full payment is due upon receipt of a periodic statement of charges, then the first box shall state “Full payment due upon receipt of billing statement.”
(3) The second box shall contain the wording “OTHER FEES” and shall disclose all other fees, including late payment penalties and any charges for exceeding the credit limit.
(4) The third box shall contain the wording “ANNUAL FEE,” underneath which the appropriate information shall be disclosed.
(5) The fourth box shall contain the wording “TRANSACTION FEE,” underneath which the appropriate information shall be disclosed.
(6) The fifth box shall contain the wording “FREE PERIOD” or “GRACE PERIOD,” underneath which the appropriate information shall be disclosed. For example, “30 days,” or “yes, if full payment is received by next billing date,” or “yes, if full new balance is paid by due date.”
Subd. 4.Additional disclosures permitted.
Nothing in this section prohibits a creditor from disclosing additional terms, conditions, or information, whether or not relating to the disclosures required under this section, in conjunction with the disclosures required by this section.
Subd. 5.Exception.
This section does not apply to any advertisement, catalogue, or other written document or material which does not contain a credit card application.